Natasha Kaneva is joined by John Royall, Head of the US Integrated Oils & Refining equity research team to discuss the outlook for refined oil products like diesel ahead of the February 5 European embargo on imports of Russian oil products. Brent oil price has gained 13% from the bottom reached on January 4 to trade at $88/bbl, $5 above our model-derived fair value for January. While optimistic demand expectations from China’s reopening have helped oil regain December losses, we believe soaring middle distillate prices and cracks are mostly behind crude’s bullish price action. We expect volatility in distillate cracks and prices in 1Q23 around embargo implementation but see market imbalances clearing by 2Q23 and risk premium dissipating as Europe and Russia had a year to prepare. 

Speakers

Natasha Kaneva, Head of Global Oil and Commodities Research

John Royall, Head of U.S. Integrated Oils & Refining equity research

 

This podcast was recorded on 27 January 2023.

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