Oil Up On Diesel Tightening As Goldman Increases Summer Brent Expectations

by Ship & Bunker News Team
Monday February 26, 2024

A slump in U.S. refining activity and ongoing Russian sanctions causing a tightening of diesel supplies in Europe resulted in crude prices on Monday rising slightly above 1 percent and well within their range bound parameters.

Phil Flynn, senior market analyst at Price Futures Group Ltd., said of the trading behaviour, "We seem to be slipping back to the supply side issue; demand is very strong and at the end of the day, it's about supply and demand."

As such, John Kilduff, founding partner at Again Capital, pointed out that possible supply disruptions largely due to hostilities in the Middle East "are what's haunting this market."

However, it was also said that oil on Monday was supported by a boom in travel in China during the Lunar New Year holidays, as well as local refiners procuring cargoes globally since the holiday – in turn sparking hopes for a more sustained demand recovery.

Perhaps stoking bullish longer-term sentiments, Goldman Sachs revised its forecast for summer peak Brent prices to $87 per barrel, up by $2 from earlier expectations, noting that "OECD commercial stocks on land have drawn somewhat faster than expected as the redirection of flows away from the Red Sea has increased inventories on water."

Goldman also suggested that Brent could trade with a ceiling of $90 per barrel in the near term due to a modest geopolitical premium from Middle East tensions.

In other oil news on Monday, production resumed at Libya's Wafa field after being shut down due to protests over salary non-payment; the closure caused the Libyan dinar to plummet against the U.S. dollar in black market trading to its lowest point in almost a decade, according to media.