The Diesel Market Is Soaring, And Gasoline Prices Will Catch Up This Summer

• Oil prices recovered firmly above $100 per barrel this week despite the strict and ongoing lock-downs conditions in China and a very strong US Dollar
• The push for lower carbon fuels has resulted in higher prices at the pump
• The diesel market has been soaring recently but gasoline prices could catch up this summer

It was a choppy week for oil markets, but as it stands, prices are heading into May with positive momentum.  Oil prices recovered back above their respective 20-day moving averages this week despite the ongoing Chinese lock-downs and a very strong US Dollar. On that note, the very restrictive measures in Chinese megacity Shanghai have been in place for more than a month now and have even spread to other key cities.

At the same time, the US Dollar index has soared to multi-decade highs. So considering the world’s largest oil importer is effectively shut-down coupled with the currency pressures, the recent strength in oil is notable. This speaks to the tightness of global oil supplies and the likelihood of further downside in Russian oil production, as the West pushes away Russian imports. It also signals that oil prices may be finding good support ahead of the fast approaching high-demand summer months.

As such, we are viewing the supply-side dynamics as more impactful and long-lasting while the Chinese lock-downs are temporary in nature. Further to that end, the inevitable easing of these strict measures in China could unleash significant pent up demand in the coming weeks and months. – READ MORE