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The IMO 2020 rule will cut the allowed sulfur content of marine fuel from 3.5% to 0.5% from January 2020. Bank of America Merrill Lynch says it is very bullish on the diesel crack because refining upgrading capacity is not keeping pace with middle distillate demand.
Ship fuel switching to low-sulfur diesel is expected to pull middle distillates away from road and farm use, which would lift diesel prices relative to crude.
freightwaves.comJohn KingstonOct 21, 2018After 90 past bullish policy events, ULSD / Diesel moved a median +1.4% over 5 sessions (66% higher; middle half -1.9% to +4.1%), and +0.1% over 20.
After 175 past neutral policy events, Crude Oil (Brent) moved a median -0.9% over 5 sessions (45% higher; middle half -3.6% to +3.0%), and +0.7% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
