Oversupply of diesel puts pressure on oil prices

Oil prices find themselves under renewed pressure after having enjoyed a short breather. Brent has fallen to $47 per barrel this morning, its lowest level since early October. At a good $43 per barrel, WTI is at its lowest level since early September. Oil products are still putting pressure on prices. 

The gasoil price is trading at a two-month low of $430 per ton. The crack spread between gasoil and Brent is again nearing its mid-October lows of $11 per barrel. In view of the already very high gasoil stocks, record-high net exports of diesel from China and somewhat subdued diesel demand, there is growing concern that storage facilities could soon reach capacity. 

"In turn, the low crack spreads make it less attractive for refineries to process crude oil. As a result, crude oil stocks are also likely to further increase. In other words, there is little at the moment to suggest any end to the downswing on the oil market", says Commerzbank.