The International Energy Agency (IEA) warned earlier this week that oil market deficits would worsen in the fourth quarter.
The summer-announced oil production cuts by Saudi Arabia and Russia exacerbated the situation. However, insufficient refineries are another reason why the world’s inventories of intermediate distillates are so much lower than usual.
The situation is particularly significant in Europe and North America since a number of refineries were shut down and others converted to biofuel production facilities during the outbreak. The remaining capacity seems to be enough for producing petrol in response to demand but insufficient for producing diesel fuel and other middle distillates demand.
Market reaction
Crude oil prices continue to advance following this headline. As of writing, the barrel of West Texas Intermediate (WTI) is down by 0.35% trading at $90.02
