PSX - Goldman sees record diesel fuel margins sustaining

In a note Sunday, Goldman's commodity team wrote that a new pricing regime for oil (USO) requires "demand destruction" for oil products. However, as high prices lead to falling demand for products like gasoline, Goldman expects distillate fuel demand to remain strong and margins to remain high. The note points to several key factors which will lead to higher distillate fuel margins:  Diesel and jet fuel stocks are at historic lows, and seasonally-adjusted inventory draws are large and accelerating. Jet fuel consumption is poised to accelerate into summer with a return to international travel. High natural gas prices will lead to "gas to oil" switching in Europe and Asia. The Russia / Ukraine war will reduce distillate supply, as Russia exports ~900kb/d of diesel fuel and ~900kb/d of residual feedstocks, which are largely upgraded into diesel by European and Chinese refiners. Refinery operating costs are increasing, particularly in Europe. Futures

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Goldman sees record diesel fuel margins sustaining