Global product markets weekly: slight margin recovery as fuel oil strengthens

North Sea Dated rose (albeit marginally) for the fifth consecutive week during the week commencing 28 January 2019, rising approximately $0.40/bbl to average $61.50/bbl. The supply side has held steady over the past few weeks, although the market failed to maintain the strength it’s seen over the past few weeks. The US has effectively cut off Venezuelan oil supply to the Gulf Coast (although it’s not a direct embargo). Although there is crude upside on this US Treasury action, we assume the displaced barrels will likely find a home in China or India. The product markets were able to finally price in some of the recent crude rally. Additionally, the polar vortex was able to boost pull on heating oil and other middle distillates, providing upside to a recently depressed class of distillates. Maintenance season is almost in full effect, as over 1.3 million b/d of US runs have come off in the last few weeks. Our latest outlook has the global benchmark averaging $62.10/bbl in Q1.