Why Refined Products Can Diverge from Crude
From our company archive. Market commentary reflects its original publication date.
There are times in this business when watching the crude price alone tells you very little about what is actually happening in the physical market.
This is one of those times.
Refined products remain exceptionally tight. Diesel margins in Europe have pushed to levels we haven’t seen before, gasoline refining margins are close to record highs, and disruption to traditional supply routes continues to put pressure on available barrels.
For anyone physically buying or selling product, the important question isn’t simply where Brent is trading.
It’s where the replacement barrel is coming from.
Russia remains constrained, Middle East flows are being disrupted, inventories in a number of markets are tight and refinery maintenance is approaching. At the same time, refiners with available capacity are understandably running hard to capture some very strong margins.
That combination makes the next few months particularly interesting.
From our perspective at Drakensberg Energy, it reinforces something we have been seeing for some time: access to reliable supply, sensible logistics and counterparties that can actually perform are becoming increasingly valuable.
There will always be another price on a screen.
Finding the physical barrel, getting it where it needs to go and completing the transaction is another matter entirely.
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