Peak European refinery maintenance and threadbare inventories are keeping regional diesel cargo premiums stoked in the high-$50s per metric ton over ICE gasoil futures despite an influx of imports from the US and new figures suggesting diesel demand is beginning to wobble in key European markets. US investment bank JP Morgan voiced concerns last week that aggregate figures showing continued growth in European diesel demand masked serious falls in some markets. Diesel demand fell by a combined 90,000 barrels per day or 8% in Spain, Italy and Poland during the first half of 2012 versus last year, with overall growth in the market largely attributed to demand booms in Sweden, Turkey and Switzerland. “Market dynamics are realigning as the continued economic malaise weighs on regional demand, which is offset by the radical shake up in the European refining industry,” warned the bank in an Oct.3 research note. JP Morgan says the surge in diesel imports into the UK and French markets following Petroplus refinery closures is also masking deepset demand weakness. New mid-distillate refining capacity has meanwhile kept Spain and Poland away from the diesel spot market.
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