The shortage of gas and the search for alternatives are forcing households and businesses to more actively use diesel fuel for heating and power generation, which may provoke a shortage of this type of fuel by spring, causing another jump in energy prices. This is reported by Bloomberg with reference to the forecast of the consulting company Wood Mackenzie Ltd.
The company predicts that by the beginning of spring, diesel fuel stocks on the continent will reach a minimum in the last 12 years, and despite the fact that Wood Mackenzie Ltd. expects to accumulate reserves until January 2023. The consulting company explains the sharp drop in inventories by the entry into force in February 2023 of sanctions against Russian oil products, which include diesel fuel.
Decreased EU diesel supplies boost refinery profitability, said James Burleigh, chief analyst at Woodmac. He predicts that the sanctions will give impetus to its own production in Europe. In November alone, according to Woodmac forecasts, crude oil refining in Northwest Europe will increase by 420,000 barrels, reaching 6.14 million barrels.
“We expect production growth to continue to be supported by strong net cash margins and expect gasoil/diesel stocks to rise by nearly three million barrels at the end of December,” says Burleigh.
There is another reason why the EU cannot build up enough stocks – this is the arrangement of exchange trading in diesel fuel. The agency notes that they are arranged in such a way that the current price exceeds the cost of diesel supplies in the future, so the companies are not interested in long-term contracts and try to sell the goods as soon as possible.
Local problems with the supply of diesel in Europe are already observed, for example, interruptions in diesel were reported in Spain. Local companies attribute the sharp increase in demand for diesel to a reduction in gas supplies from Russia, in such circumstances, many consumers have chosen to use diesel as an alternative.