After more than two years of tightening, global transport fuel market fundamentals will loosen over the next twelve months as overall supply growth accelerates to 1.5 million b/d and demand rises by 1.1 million b/d.
The global loosening of transport fuel fundamentals will be driven by gasoline and diesel. Gasoline markets will weaken over the forecast period, particularly East of Suez where a combination of a major production expansion and decelerating demand growth will bring that region’s market into balance. The global diesel market will also weaken over the forecast period as demand growth slows, particularly in the U.S. and Asia-Pacific, and production growth accelerates.
As the market moves from undersupply to oversupply, product spreads to crude will weaken across the board over the next twelve months. As a result, refining margins will shrink after an extended period of strength.