Oil prices could be slammed in the near-term by a growing glut of diesel in the U.S., Europe, and Asia.
This oversupply of diesel could push refiners to cut back on the amount of crude oil they consume as inputs, reducing oil demand.
Financial Times: In the US, stockpiles of middle distillates (which, alongside diesel, includes heating oil) are at their highest in decades. Europe faces a surplus of distillates so great that traders are booking tankers to store it offshore after running out of inland deposits.
The International Energy Agency, the industrialised countries’ oil watchdog, says the volume of refined oil products in floating storage offshore Europe rose 25 per cent in September. In Asia, diesel stocks are rising fast, with inventories in the Singapore hub trebling since August to a record.
“The world has yet to come to terms with the massive middle distillate stock surplus,” JBC Energy, the Vienna-based oil consultancy, says.
A quarterly statement from CSX, the US railway operator seen as a bellwether of the country’s industrial and trade activity, points to weak distillates demand.
CSX locomotives used 18 per cent less fuel in the most recent quarter than in the same period a year ago.
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