Russia’s decision to ban exports of all types of diesel is adding to pressure in an already tight global market. The lifting of the ban, which came into force on Sept. 21, will depend on how quickly supplies are replenished in the domestic market, according to First Deputy Prime Minister Pavel Sorokin.
One thing most people are not aware of is gasoil is the same as diesel in the futures markets. Additional heating oil is diesel with anti-clogging agent so it doesn’t freeze in cold weather.
Insecurity of supply from Russia has already been priced into the market with the result that European countries are importing more diesel from both the USA and Middle East.
The fact gasoil is not performing out of line with Brent crude suggests the threat of Russia supply is not viewed as serious by traders.
However, oil prices are still firm and the pause that began this week is modest when compared to previous consolidations within the trend. There is clear potential this is nothing more than a pause within the broader recovery trend.
As energy prices recover carbon emission futures are also rebounding from a short-term oversold condition. This week’s upside weekly key reversal sustains the medium-term sequence of higher reaction lows. As a government sponsored market, traders are learning to buy the dip.