Goldman Sachs stated in a recent report that while the exceptionally high diesel refining margins may decrease from their present levels, they are still expected to remain higher than the historical average due to the global processing capacity shortage.
The diesel market's constrained supply has been a prominent feature of the worldwide petroleum landscape recently. Specifically, U.S. diesel stockpiles are at their lowest point for this time of year since 1996, and Singapore's reserves of middle distillates, which encompass diesel, have fallen to their lowest level since February 2024.
Goldman Sachs anticipates that diesel profit margins will decrease somewhat from their current elevated state, but they predict they will remain "above pre-pandemic averages" due to ongoing fundamental constraints in refining capacity.
Goldman Sachs anticipates that diesel refining margins will remain approximately $10 per barrel above the 2013-2019 average in the second half of this year and in 2026. They also predict European gasoil margins to be $23 per barrel, up from their previous estimate of $19 per barrel. Similarly, U.S. heating oil margins, which are comparable to gasoil, are expected to reach $28 per barrel, compared to the earlier forecast of $23 per barrel.
Goldman Sachs noted that the ongoing deceleration in the growth of worldwide refinery capacity, dropping from 1.2 million barrels per day in 2023-24 to 500,000 barrels per day in 2025-26, is expected to sustain high profit margins for refined products.
Crude oil futures closed out the day and the week with losses, trading within a narrow range. Prices were buoyed by the U.S. making progress toward a trade agreement with the EU and a second consecutive weekly decline in U.S. crude oil stockpiles. However, increased production from OPEC+ limited further gains.
Societe Generale analyst Ben Hoff noted that we're experiencing the typical summer slowdown, with little interest in taking on substantial directional risk.
As we look to the future, experts still anticipate a considerable surplus due to the decrease in seasonal demand during autumn, potentially causing further price declines.
This week's Nymex crude contract for the nearest month (CL1:COM) concluded for shipment in September-1.3%to $65.16 a barrel, along with the Brent crude contract for September delivery (CO1:COM) settled -1.2%at $2.689/MMBtu.-12.7%The price dropped to $3.110 per million British thermal units (MMBtu) due to predictions of cooler-than-average temperatures during the initial week of August and potentially the week after.
* Nymex crude oil and Brent crude oil prices both decreased on Friday, falling by 1.3% and 1.1% respectively, while U.S. natural gas saw a slight increase of 0.5%. * Crude oil prices on the Nymex and Brent exchanges both closed lower on Friday, with declines of 1.3% and 1.1%, but U.S. natural gas prices rose slightly, gaining 0.5%. * The trading day on Friday saw Nymex crude and Brent prices decline by 1.3% and 1.1%, conversely, U.S. natural gas inched up by 0.5%.
ETFs: (NYSEARCA:USO), (BNO), (NYSEARCA:UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)
Energy stocks, tracked by the Energy Select Sector SPDR Fund (NYSEARCA:XLE), were +1.3% for the week.
Top 10 energy and natural resource companies with the biggest gains over the last 5 days: Fusion Fuel Green (HTOO) +64.5%, Bloom Energy (BE) +37.4%Maxeon Solar Technologies,MAXN) +33.1%, American Battery Tech (ABAT) +31.2%, Eco Wave Power, (WAVE) +28.9%, Geospace Technologies (GEOS) +20.4%, Atlas Lithium (ATLX) +20.3%, Lithium Argentina (LAR) +18.3%, Uranium Royalty (UROY) +18.3%, Borr Drilling (BORR) +17.5%.
Top 10 energy and natural resource companies that have decreased the most in value over the last 5 days, starting with: VivoPower International (VVPR) -29%, Namib Minerals (NAMM) -27.4%, USA Rare Earth (USAR) -17.8%, New Fortress Energy, (NFE) -17.4%, Icon Energy (ICON) -13.5%, U.S. Antimony (UAMY) -13.4%, Teck Resources (TECK) -12%, EQT Corp. (EQT) -11.8%, Enphase Energy (ENPH) -10.5%, Comstock Resources (CRK) -10.4%.
Source: Barchart.com
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