(Bloomberg) -- A key metric for measuring the profitability of making diesel in Europe is at its weakest in more than 15 months, creating a headwind for refiners.
The so-called ICE Gasoil crack — which shows diesel’s premium to crude oil — fell as low as $14.22 a barrel earlier Thursday, according to fair value data compiled by Bloomberg. That’s the lowest it’s been since May of last year.
The crack has been on a downward trend this month, pressured by lackluster consumption and the arrival of diesel-hauling supertankers. Europe’s overall demand for diesel-type fuel is expected to be even worse in 2024 than during the first year of the Covid pandemic.
Diesel futures are also in a deepening contango structure — where fuel for delivery at a later date is comparatively more expensive — another signal of supply outpacing demand.
The September contract’s discount to October was as low as $5 a ton this week. That’s the weakest for the first two months since late 2022 — excluding contract expiry days, which are often highly volatile.
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