Refiners are planning to spend the summer increasing jet fuel and diesel production instead of gasoline, traders and analysts said, favoring what have historically been the least profitable parts of the barrel instead of the most profitable.
That is unusual and exemplifies the topsy-turvy nature of the global oil markets. Refining crude oil into diesel or jet fuel is currently more profitable than making gasoline due to an inventory squeeze in Europe following sanctions on Russia.
"The U.S. is now acting as the barrel of last resort for an Atlantic Basin that scrambles to find alternatives to shunned Russian crude oil and petroleum products," said analysts at Citi in a Wednesday note. On average, gasoline is more profitable to refine in the months headed into driving season - but not this year, as heating oil cracks have soared.Even as export demand has risen, not all parts of the U.S. are seeing the same benefit.
"It's a mismatched market because so many diesel barrels are needed elsewhere in the world and we have too much inland, driving physical prices down," said one products broker.
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