Refined products weakness pressures oil prices
Renewed optimism over a Russia–Ukraine ceasefire weighed on the oil market yesterday. ICE Brent settled more than 0.9% lower, closing at $60.56 per barrel — its lowest level since May. The President of the United States stated that an agreement to end the war in Ukraine is closer than ever, following talks in Berlin. However, territorial disputes remain a major sticking point, according to ING commodity experts Ewa Manthey and Warren Patterson.
Oil markets are closely watching developments, given the significant supply risks posed by sanctions on Russia. While Russian seaborne oil exports have remained relatively stable since sanctions were imposed on Rosneft and LukOil, the crude is struggling to find buyers. This has led to a growing volume of Russian oil remaining at sea. India ، a key buyer of Russian oil since the onset of the war — is reportedly set to reduce its imports to around 800,000 barrels per day this month, down from approximately 1.9 million barrels per day in November.
The continued weakness in the refined products market has added to broader pressure on oil prices over the past week. Refinery margins surged in November amid concerns over sanctions disrupting refined product flows and persistent Ukrainian drone attacks on Russian refinery infrastructure. These concerns have coincided with seasonal maintenance and some refinery outages.
This trend has been particularly evident in the middle distillate market, where the ICE gasoil crack climbed toward $38 per barrel in November due to heavy speculative buying. However, speculators have been aggressively selling gasoil since late November, causing the crack to fall back toward $23 per barrel. As of last Tuesday, net long positions in ICE gasoil stood at 58,578 lots ، down sharply from the peak of 102,195 lots recorded on November 25.