(Bloomberg) -- Europe’s diesel market is showing signs of tightening, with the fuel’s premium over crude oil reaching a two-month high.

The so-called crack spread from making the fuel from Brent crude rose to about $21 a barrel on Friday, a gain of about 60 cents from Thursday’s high. Immediate prices also rose relative to later ones, a sign that traders are viewing the market as being tighter.

Europe’s diesel market is important because the fuel is a key component of demand for what the continent’s oil refineries make. It’s also a destination for supply from other regions around the world.

It’s currently not profitable for the region for traders to direct supply from the US, Sparta Commodities analyst James Noel-Beswick said in a note this week. 

“The bullish trend in European diesel prices is likely to persist” until that transatlantic trade becomes profitable, he said, adding that flows from the Middle East and the west coast of India are tending to head to Asia rather than Europe. 

 

 

  • The premium of ICE gasoil July futures to the August contract was as much as $2 a ton intraday. The spread closed Thursday at a discount of 25c a ton.
  • ICE gasoil’s premium to Brent crude, known as the crack, rose to as much as $21.02 a barrel, the highest intraday level since April 15.

 

©2024 Bloomberg L.P.