Global product markets weekly: light ends and distillates diverge across globe

The Dated Brent crude price fell by an estimated US$2.40/bbl during the week commencing 8th October, settling just north of $83/bbl. Ongoing trade tensions between the United States and China have sparked concerns about short to medium term oil demand. Any headwinds to global trade flows would have an especially pronounced effect on distillate product demand, the catalyst for global refining margins for the last two years. However, while some bearish demand signals are on the horizon, the coming US sanctions on Iran (less than a month out) pose an upside risk to Brent. Where do we see this push and pull going? Given potential spare capacity from Saudi Arabia and Russia and increasing US production, we forecast Brent settling below $80/bbl as 2018 comes to a close.