US Diesel Export Ban Sends WTI Crude Futures into Largest Discount Since May
A potential US export ban on diesel is widening the gap between domestic crude oil futures and the global Brent benchmark, indicating that markets expect US refiners to process less crude oil if their diesel output gets stuck at home.
According to Reuters, West Texas Intermediate (WTI) crude futures traded as much as $12.02 a barrel under Brent futures on Thursday, their largest discount since May 6.
Analysts say US refiners could cut their crude runs by up to 12% if diesel exports are banned, with key storage hubs likely to fill up within a month.
The US is the world's largest diesel exporter, with net exports of about 1.2 million barrels per day, versus production of 5.1 million bpd, according to Morgan Stanley.
Wood Mackenzie analysts estimate that a diesel export ban would redirect a 700,000 bpd oversupply of diesel and gasoil into storage, effectively filling Gulf Coast inventories to maximum capacity in just over a month.