Market Commentary

March intraday pricing and liquidity levels for Light Ends and Distillates

28.03.2023 By Stanislav Ermilov

Crude faced a torrent of macro selling this month as the market de-risked in light of the fallout from SVB and the banking crisis.
Amidst this almost $10/bbl correction, clean products held up with significant rallies in cracks and spreads, suggesting product fundamentals remain tight and demand may in fact be improving in the lower flat price environment.
Gasoline has taken over the mantle from Naphtha and is now the star performer with Rbob, Ebob and 92R cracks all very well bid, as shown by Tallarium data showing offers thinning out through the 2nd half of the month.

Please note intraday Bid/Offer data uses box plots indicating:

The upper quartile and lower quartile price range
The maximum, minimum and median Bid or Offer

European distillate differentials and Gasoil spreads are running out of steam once more having rallied significantly since the carnage in February. With the recent collapse still very fresh in the memory of traders, holders of length will be wary of weathering another bout of weakness.
The April Gasoil crack remains range-bound but trending lower now. As Gasoline and Naphtha start to carry the margin, Gasoil may increasingly take a back seat.
The OTC markets gave an early signal for this latest Distillate corrections as the 10ppm CIF Med diffs came off sharply mid-month potentially on the back of cargo hedging. Gasoil can remain under pressure if the Med continues to trade in single figures.

There was a significant amount of Jet buying over the last week when Brent approached $70/bbl, which is suggestive of airline hedging coming back into the market after a long period of demise for Jet diffs.
Tallarium quote data shows that there were 4x as many bids as offers on the 21st of March for April Jet. This preceded a sharp rally in Jet diffs, however the market has eased at the time of writing.

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