Global product markets weekly: Margins fell in all regions, led by middle distillates

The oil market rose to new post-pandemic highs last week. North Sea Dated crude’s weekly average rose by US$2.67/bbl to US$53.12/bbl in the week to 8 January. Support came from Saudi Arabia’s announcement that they will unilaterally reduce production by a further 1 million bpd in February and March. This followed the OPEC+ decision to allow slightly higher quotas for Russia and Kazakhstan. Short-term oil demand remains weak especially in Europe and the US, with further downside risk as case numbers rise in these regions. Further widespread infections of the new UK or South African variant coronaviruses would likely lead to tighter mobility restrictions and further weaken demand for transportation fuels. Our global composite refining margin fell by US$0.56/bbl to US$2.05/bbl, the first weekly decrease following three consecutive increases.