Market · Distillates · 5 min read

Storage to the rescue? ARA gasoil vs. flat price

When physical length leads the curve and when it lags it.

ARA independent gasoil stocks are the canonical European distillate balance indicator, but they are noisy week to week. The signal that matters is the four-week change versus seasonal norm.

When ARA stocks build counter-seasonally for three consecutive weeks, the prompt timespread tends to weaken into contango within a fortnight. When they draw counter-seasonally, expect backwardation to steepen and the front of the curve to rally relative to flat price.