European diesel refining margins dropped more than 7% on Monday as the premium of low-sulphur gasoil futures to Brent crude narrowed by $5.52 to $70.79 per barrel by 1612 GMT.
The decline in margins followed a reduction in the gasoil-to-Brent spread, which fell to its lowest level in weeks. Trading activity remained subdued, with BP selling an ultra-low sulphur diesel cargo for delivery to Gdynia, Poland during the afternoon session. No transactions were recorded in the Mediterranean window despite active bids, while TotalEnergies was the only company to post an offer.
Supply-side disruptions in Russia added to market pressures after the Perm oil refinery, the country’s seventh-largest processing plant by volume, halted operations following a Ukrainian drone strike on August 21. The attack caused a fire and damaged technological units, according to two industry sources.
Imports into the EU-27 and UK are projected to average 724,000 barrels per day in August, up from 466,000 bpd in July, according to data from Kpler. The United States accounted for over half of these imports, supplying 446,000 bpd.
The combination of weaker refining margins, reduced gasoil premiums, and supply concerns from Russia contributed to the bearish sentiment in European diesel markets.
