Goldman Sachs forecasts greater upside potential for gasoline prices — OilPrice
Investment bank Goldman Sachs has changed its key recommendation in the fuel market: instead of diesel fuel spreads, analysts advise investors to take long positions in European gasoline futures for delivery in mid-2027. As OilPrice reports, the bank believes gasoline has greater potential for further price increases, although diesel prices and margins may also rise.
Production reallocation
According to Goldman Sachs analysts, refineries are shifting production from gasoline to diesel fuel, rapidly tightening the gasoline market. A bank note dated September 16 states that this change in the output structure is the main reason for the narrowing gasoline market.
For several months, Goldman Sachs has stressed that the largest reduction in supply in the petroleum products market is in diesel. Analysts link this to the lowest global refining activity for this time of year since the 2020 pandemic.
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Diesel shortage persists
The bank called diesel fuel the epicenter of the fuel shortage. According to Goldman Sachs, refinery outages caused by the war in the Middle East and in Russia, the aggressor state, have sharply reduced global petroleum product supplies, primarily diesel. Additional production in the Americas and Africa, according to analysts, has offset only about one-third of the lost supply volumes.
As of the end of August, refinery downtime was 60% higher than the seasonal average, Goldman Sachs noted. The bank expects limited diesel fuel supplies to persist next year. Throughout the summer, the global petroleum products market became increasingly tight, and refining margins reached record levels, as supplies of refined products were much more constrained than crude oil supplies.
