Middle Distillate Tightness Supports Oil Prices Amid Global Uncertainty

Oil prices have steadied due to a combination of factors, including low inventories of middle distillates such as diesel and jet fuel. According to ING's commodities team, refinery maintenance, reduced processing rates, and steady demand are all contributing to the tightness in this segment.

The current situation is causing healthy margins for refiners producing these products, which encourages them to maintain or increase runs, thereby supporting crude demand. This is evident from the backwardation in the middle distillate complex, where near-term prices are higher than future prices.

While crude oil faces headwinds from global economic uncertainty, the strength in middle distillates provides a floor for oil prices. As long as inventories stay low and demand holds, this product-specific tightness will likely continue to support oil prices.