Morgan Stanley predicts a deepening diesel shortage in Europe, likely driving up prices and straining fuel supplies.
Morgan Stanley's report explicitly forecasts a deepening diesel squeeze in Europe. As the benchmark European diesel contract, Gasoil (GO) is directly impacted: tighter supply pushes prices higher. Low inventories and limited refinery runs cited by the bank reinforce the bullish outlook.
The squeeze is expected to push Gasoil prices higher as supply struggles to meet demand, especially ahead of the winter heating season. Traders are pricing in a widening backwardation.
Increased refinery runs, higher imports from Asia or the Middle East, or a drop in seasonal demand could alleviate the tightness. However, Morgan Stanley sees these as unlikely in the near term.
Morgan Stanley warns Europe's diesel supply crunch will intensify, with low inventories and refinery outages squeezing the market. The bank expects prices to rise further, adding pressure on energy costs across the region. The forecast underscores persistent risks to European fuel security as demand holds firm.
Low inventories, ongoing refinery maintenance, and limited spare capacity are restricting diesel supply in Europe. Morgan Stanley highlights these factors as intensifying the shortage.
Consumers face higher fuel prices at the pump and increased heating costs, especially as the winter season approaches. Industries relying on diesel for transport and machinery may also see rising operational expenses.