Global economy: slowing. File image/Pixabay.
Gasoil futures prices for fuel delivered over the course of 2020 are around $17 per barrel higher than Brent, down from $19 at the same point last year, and show no sign of pressure on fuel supplies, according to Reuters market analyst John Kemp.
Gasoil futures are trading in a backwardation, but the six-month calendar spread is not especially large by the standard of the last 10 years and is narrower than the backwardation in Brent.
Hedge funds are no longer anticipating a severe shortage of middle distillates in the near term, Kemp said citing position reports published by ICE Futures Europe and the US Commodity Futures Trading Commission.
Distillate consumption is closely correlated with the economic cycle, so the slowdown in global manufacturing and trade during 2018/19 has taken much of the predicted heat out of the distillate market.