There was regional divergence in the diesel market in January. While the EU saw stronger diesel prices and refining margins due to new sanctions on product refined from Russian crude that changed expectations of supply, the diesel futures curve became tighter, and cargo premiums increased. There were also concerns about diesel that is being redirected away from northwestern Europe, putting pressure on diesel supply availability in the short term. Cold weather forecasted for the US and subsequent seasonal demand helped also raise European sentiment. In the US, however, supply was strong with high inventories and decreasing export demand due to increased domestic refining by Mexico. Short-term heating demand provided some bullish support but could not outweigh bearish fundamentals, leading to lower US diesel prices for the month.
