Global product markets weekly: recovery in gasoline and middle distillate cracks strengthens composite refining margins

The North Sea Dated weekly average edged up to US$39.54/bbl as sentiment remained optimistic after OPEC+ extended its 9.7 million b/d production cut until the end of July. As we expected in our short-term forecasts, oil demand is recovering as many economies have come out of coronavirus lockdown restrictions. The M1-M2 spread for North Sea Dated flipped into backwardation, indicating a tighter prompt crude market with increased demand from Europe. However, high crude inventories added headwinds to the price rally, along with a weaker outlook for the global economy from the IMF. Crude commercial storage in the ARA hub reported by Genscape registered a week-on-week increase on 5 June.