High Stocks Blunt Bullish Demand Impacts
Elevated inventories of middle distillates and (now) gasoline are pressuring spreads to crude. Our outlook for gaso-line fundamentals calls for more “normal” conditions to return to the gasoline market after a period of extraordinary tightness, and strength in spreads to crude. Yet this correction will not be met by a full re-balancing in middle distillate markets. Diesel demand is too weak to produce a quick burn off of elevated stocks, leaving spreads floundering.