Energy in the new era

The days of vaccine certificates and COVID-19 tests for travel are long gone for most, and yet jet fuel demand doesn’t seem to have fully recovered from the pandemic. S&P Global Commodity Insights reporters Virginie Malicier and Maxim Kotenev tell Francesco Di Salvo how record-high physical premiums have led to a flurry of eastern cargoes sailing to Europe, and how short-staffed airlines and airports have had to cap passenger capacity growth despite ample pent-up travel appetite. Check our Jet CIF NWE Cargo assessment (PJAAU00) on Platts Dimensions Pro. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

Commodity markets are on red alert. Economic warning signs are coming in thick and fast with skyrocketing inflation in Europe and the US, rising interest rates and slowing economic growth. Industrial metals are leading the decline lower, with energy and agriculture prices also off their March peaks amid a weakening demand outlook. Russia’s supply side risks and China’s recovery uncertainty will also shape the direction of commodity markets as 2023 looks set for a bumpy year. Click here to see the full-size infographic

Japan will start formal policy discussions July 28 to introduce a fourth round of refining regulations aimed at boosting the processing volume of vacuum residue, with preferential treatment expected for efforts to decarbonize the refining process, sources told S&P Global Commodity Insights July 26. The talks will be launched by the Ministry of Economy, Trade and Industry's natural resources and fuel committee, which will present ideas for new regulations and review regulatory responses from the last round that expired at the end of March, the METI sources said. The new regulations would likely follow the framework of the third round of regulations, with new elements relating to decarbonization efforts by refiners to be considered as part of the regulatory response, the sources said. The refiners' potential use of blue and green hydrogen instead of gray hydrogen in the refining process could be considered among the decarbonization efforts, the sources added. The third round of regulations required refiners to achieve a national target vacuum residue ratio, the daily residual processing volume as a percentage of the daily crude processing volume, of 7.5% by the end of March 2022. Given a significant drop in Japanese refiners' refining volumes in the past two years because of the pandemic-led demand slump, Petroleum Association of Japan President Tsutomu Sugimori said March 22 that "It will be difficult to achieve." "However, we are in the midst of emergency situations such as the coronavirus pandemic and the Ukraine issues, so that we expect to see some sort of mitigation," Sugimori added at the time. Previous regulations The third round of regulations introduced in 2017 focused on increasing processed volumes at residue cracking units across Japan's refining fleet with improvements in productivity. The previous two rounds of regulations had led to a reduction in Japan's overall crude distillation capacity. The third round of regulations required refiners to increase processing volumes of vacuum residue by the end of fiscal year 2021-22 (April-March) from baseline average volumes processed over FY 2014-15 to FY 2016-17. Under its definition, vacuum residue has a true boiling point of more than 565 degrees Celsius. This includes atmospheric residue, vacuum residue, vacuum gasoil and other residues processed at fluid catalytic cracking and residue fluid catalytic cracking and cokers. In order to comply with the third round of regulations, refiners had been expected to revamp their facilities, including carrying out work to upgrade pumps and change catalysts to be able to process more residues at units such as FCCs, RFCCs and cokers by the end of March 2022. Japan's nameplate refining capacity was 3.5188 million b/d across 22 refineries as of March 31, 2017 down 7.1% from 3.7897 million b/d earlier, following local refiners' response to the earlier rounds of refining regulations. The country's operable refining capacity stood at 3.4578 million b/d across 21 refineries at the end of March 2022.

US President Joe Biden just wrapped up a trip to the Middle East with a closely watched visit to Saudi Arabia. His national security director signaled that the success of his oil diplomacy will be judged in the coming weeks, not immediately. So will OPEC+ agree to increase production at its Aug. 3 meeting to help ease global prices? Ellen Wald, president of Transversal Consulting and senior nonresident fellow at the Atlantic Council's Global Energy Center, spoke with senior editor Meghan Gordon about the debate around Saudi Arabia's spare oil capacity, US-Saudi relations, and how Russia likely loomed over the talks. Stick around after the interview for Jordan Blum with the Market Minute, a look at near-term oil market drivers. Related content: Biden presses Saudi leaders to act through OPEC+ to increase oil supply in coming weeks High stakes for oil markets, Mideast security as Biden heads to Saudi Arabia Oil production test looms for OPEC heavyweights Saudi Arabia, UAE More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

Russia has long supplied European and US markets with fuel oil. In light of the war in Ukraine, where is this fuel going and how can the usual buyers make up the shortfall? S&P Global Commodity Insights reporters David Petutschnig and Chloe Davies discuss with Joel Hanley how the dynamics of high sulfur fuel oil and vacuum gasoil are changing fast. Explore our special report Inside Fujairah: A gateway for energy and commodities in the Middle East More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

Demand for transportation fuels has been picking up in Asia, as higher vaccination rates and improved mobility push regional economies to open up to near pre-pandemic levels. Global oil supplies, however, are not keeping pace with this recovering demand. China's move to inject more fuel supplies into the Asian market by way of a supplementary second round of oil products export quotas in early June is unlikely to help prop up regional demand-supply balances. Moreover, China's oil product exports in 2022 are likely to fall from 2021 levels as Beijing aims to minimize outflows to meet its net-zero target. Refining margins for clean transportation fuels like gasoil, jet/kero and gasoline skyrocketed to historical highs earlier this month. Even as cracks have inched lower since, expectations are these valuations will stay elevated in the foreseeable future. In this podcast, S&P Global Commodity Insights' Rajesh Nair , Su Yeen Cheong , Oceana Zhou and Zhuwei Wang shed light on the current situation and discuss the scenarios that are likely to play out in the Asian clean fuels markets in the near to medium term. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

Platts, part of S&P Global Commodity Insights, is seeking feedback on whether Russian material is part of the open spot market reflected in Platts European benchmark gasoline, LPG, and jet fuel assessments Platts has observed that an increasing number of market participants are restricting material from Russia, in part or entirely, in their spot gasoline, LPG, and jet fuel trading activity. Platts is seeking immediate feedback on whether the basis definition of open origin for its gasoline, LPG, and jet fuel assessments should continue to include Russian-origin material, or whether it should reflect the market move toward trading non-Russian material. Unless otherwise stated, Platts benchmark assessments in these markets currently reflect an open-origin basis, which could potentially include Russian-origin supply. All Platts assessments reflect merchantable commodities. Platts gasoline, LPG, and jet fuel assessments include FOB and CIF cargo markets in Northwest Europe and the Mediterranean, as well as FOB barges and coasters and FCA rail assessments. Platts is seeking clarity on whether participants in all these markets are adopting a similar stance with regard to Russian-origin material. Platts has already excluded Russian product from its European naphtha, diesel, and gasoil cargo assessments. The relevant subscriber notes are available here and here. Please send all immediate feedback, questions, or comments to Europe_Products@spglobal.com and PriceGroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by S&P Global for public viewing. S&P Global will consider all comments received and will make comments not marked as confidential available to the public upon reque

In this episode of the Oil Markets podcast, light ends pricing editors Sarah Hernandez and Jordan Daniel and US clean products manager Matthew Kohlman discuss the record-high gasoline prices that are impacting drivers across the US. They discuss historically low inventories, how a shortage of octanes is driving up prices for premium grades, what the outlook is for gasoline demand, and prices through the rest of the summer. This Oil Markets podcast was produced by Jennifer Pedrick in Houston. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

Existing open origin diesel, gasoil cargo assessments exclude Russian origin from June 1 New CIF NWE ULSD cargo assessment launched June 1, reflecting all origins Seeking more feedback on Russian-origin material in ARA barge markets Effective June 1, Platts, part of S&P Global Commodity Insights, no longer reflects Russian-origin product in its open origin European diesel and gasoil cargo assessments. At the same time, Platts has launched a new assessment for ULSD cargoes CIF NWE reflecting all origins. The decision by Platts follows a review into the continued inclusion of Russian-origin material in its European diesel and gasoil assessments, announced in a subscriber note published April 14: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/041422-s-p-global-seeks-feedback-on-russian-product-in-platts-european-diesel-gasoil-assessments Feedback gathered from the market, as well as observed market activity in recent weeks, had shown a significant move away from Russian-origin material in the spot market. Platts had observed that many market participants were now restricting material from Russia, in part or entirely, in their spot diesel and gasoil trading activity. Platts assessments reflect the value at which a standard, repeatable transaction for merchantable material takes place, or could take place, in the open spot market at arms length. Although Russian product continues to flow to the European market, Platts understands that it is not trading on the same basis as product from other origins in the spot market, and that there is a difference in value between Russian and non-Russian product. As a result, with effect from June 1, the Platts assessments listed below exclude Russian-origin product. ASSESSMENT DETAILS: From June 1, the Platts European diesel and gasoil cargo assessments consist of: Diesel Outright assessments: CIF Open origin* Restricted origin (excluding Russia) All origins (including Russia) ULSD 10 ppm CIF NWE: AAVBG00 ULSD 10 ppm CIF NWE (restricted origin): AAURO00 ULSD 10 ppm CIF NWE (all origin): ALORA00 Diesel 10 ppm CIF NWE**: AAWZC00 Diesel 10 ppm CIF NWE (restricted origin)**: AATRO00 Diesel 10 ppm UK cargo CIF NWE: AAVBH00 Diesel 10 ppm UK cargo CIF NWE (restricted origin): AAVRO00 Diesel 10 ppm UK cargo CIF NEW Basis UK MOPS diff: AUKMA00 ULSD 10 ppm CIF Med Cargo: AAWYZ00 FOB Open origin* ULSD 10 ppm FOB NWE: AAVBF00 ULSD 10ppm FOB NWE**: AAWZD00 ULSD 10 ppm FOB Med Cargo: AAWYY00 Diesel Spread assessments: Restricted origin spreads (restricted origin vs open origin*) All origin spread (all origin vs open origin*) ULSD 10 ppm Cargoes CIF NWE restricted origin spread: AAURP00 ULSD 10 ppm Cargoes CIF NWE All Origin Spread: ALORB00 Diesel 10ppm Cargoes CIF NWE restricted origin spread**: AATRP00 Diesel 10ppm UK Cargoes CIF NWE restricted origin spread: AAVRP00 Gasoil 0.1% Outright assessments: CIF Open origin* Gasoil 0.1%S CIF NWE Cargo: AAYWS00 Gasoil 0.1%S CIF Med: AAVJJ00 FOB Open origin* Gasoil 0.1%S FOB NWE Cargo: AAYWR00 Gasoil 0.1%S FOB Med: AAVJI00 *From June 1, all open origin European diesel and gasoil cargo assessments exclude Russia-origin product **basis CIF Le Havre The calculations for the associated freight netback and freight netforward European gasoil and diesel assessments remain unchanged as of June 1. However, Platts continues to monitor prevailing trade flows and review the plausible load ports in these calculations, including the continued inclusion of Russian load ports. NEW CIF NWE ULSD CARGO ASSESSMENT: Platts understands that there continues to be a flow of Russian product into Europe, and market feedback has suggested a continued need for transparency in this market. As such, Platts has launched a new assessment for ULSD cargoes CIF NWE (all origins), which reflects material from all origins, including Russia. Other parameters and specifications of the new assessment are the same as the existing ULSD 10 ppm CIF NWE cargo assessment (AAVBG00). Platts is publishing the outright value of this new assessment in $/mt, as well as the spread reflecting the value of cargoes from all origins versus restricted origin cargoes. SEEKING MORE FEEDBACK ON ARA BARGES: Platts understands there are logistical differences between the Amsterdam-Rotterdam-Antwerp barge market and European cargo markets, particularly around the demonstration of origin of product. As such, Platts has invited further feedback on whether Russian-origin material should also be excluded from its European diesel and gasoil barge assessments, and how origin of product would be demonstrated in these markets. Please send any feedback, questions or comments to europe_products@spglobal.com and pricegroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.

Asian gasoil and gasoline cracks have surged in May, amid the war between Russia and Ukraine that started in late February. Asian refineries are looking to raise run rates or delay their planned maintenance this spring to meet the demand. In this podcast, S&P Global Commodity Insights' experts— Jonathan Nonis, Reetika Porwal and Joshua Ong from the Platts pricing team and J.Y. Lim, advisor for Asia-Pacific oil markets -- discuss the contributing factors and the future trajectory of the markets. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

The recent round of Q1 earnings calls for US refiners and upstream producers were almost unanimously upbeat. Crude prices of $100+/b oil and unusually high natural gas prices, coupled with changing oil flows from the war in Ukraine, have sparked buoyant US diesel demand while the need for energy security has led to a climbing rig count in both the domestic shale patch and more offshore projects. Americas oil news director Jeff Mower sits down with senior downstream editor Janet McGurty and senior upstream editor Starr Spencer to discuss recent trends and future outlooks for US producers and refiners. This Oil Markets podcast was produced by Jennifer Pedrick in Houston. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

From the maximization of middle distillates yields by refiners to the impact of Chinese lockdowns on the Asia petrochemical sector, our editors explore the implication for European gasoline's blending margins. In this episode of the Oil Markets podcast, EMEA refined products associate editorial director Francesco Di Salvo speaks with gasoline editor Lucy Brown and naphtha editor Vinicius Maffei about the reasons for the record spread between gasoline and naphtha in Northwest Europe, a key measure of blending economics. This Oil Markets podcast was produced by Jennifer Pedrick in Houston. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

California regulators unanimously approved two landmark renewable fuel projects planned for the northern part of the state which involves converting petroleum-based refiners into renewable fuel production facilities. The Contra Costa County Board of Supervisors late May 3 approved the land use permits necessary for both Marathon Petroleum and Phillips 66 to move forward with the conversions of Marathon's Martinez plant and Phillips 66's RodeoRenewed project, which involves repurposing its Rodeo refinery into one of the US's largest renewable fuel facilities. The Board also approved Marathon's Final Environmental Impact Report, concluding the required environmental review process under the California Environmental Quality Act. Phillips 66 had received approval for their FEIR in March. "The latest vote paves the way for Phillips 66 to make a final investment decision on Rodeo Renewed in the coming weeks," said Phillips 66's May 4 statement. Phillips 66 tests the waters with Unit 250 Before announcing the complete conversion of its Rodeo, California, refinery in August 2020 to run completely on renewables, Phillips 66 had planned to convert one unit of the refinery's units– Unit 250 – to renewable service, a move which has proven lucrative as well as instructive for the company to learn about feedstock economics and the LCFS market. "We're able to get all the volume of out of Unit 250 to the end consumer through our retail and wholesale customers in California," said Brian Mandell, Phillips 66's head of refining on the April 29 earnings call. With the approval of RodeoRenewed, Phillips 66 plans to produce 50,000 b/d, or 800 million gal/yr, of renewable diesel, renewable gasoline and sustainable aviation fuel beginning in early 2024. Marathon's JV with Neste While both refiners are converting refineries to take advantage of federal credits and state credits under the state's Low Carbon Fuel Standard law, they are taking different tacks in reaching their goals. Marathon recently signed a 50-50 joint venture with Finland's Neste, a global leader in producing renewable diesel and sustainable aviation fuel. Under the deal, which was contingent on Marathon getting the Final Environmental Impact Report, Neste will provide $1 billion to cover half the projected development costs through completion. The partners will split the output equally with each party responsible for obtaining their own feedstock and selling their share of the plant's production. "The project will utilize existing process infrastructure, diverse inbound outbound logistics and is optimally located to support California's LCFS goals while strengthening MPC's footprint in renewable fuels. Our intended partnership with Neste also creates a platform for additional collaboration within renewables," said Mike Hennigan, Marathon's CEO on the May 3 results call. Neste is the largest global producer of SAF, with 100,000 mt/yr capacity, which will rise to 1.5 million mt/yr by end-2023 once the expansion of its Singapore facility is competed. Marathon expects the plant to start up in the second half of 2022, with production capacity of 260 million gal/yr of renewable diesel. The pretreatment unit is expected online in 2023, giving it greater feedstock flexibility at which time the plant will ramp up to 730 million gal/yr by end 2023. According to S&P Global Commodity Insights, US renewable diesel production reached the 1 billion gal/yr in 2021 and is expected to grow exponentially as more projects come online. Falling LCFS prices less impactful on economics As more renewable projects come online, the price of the of California's LCFS has been falling as the credit bank is rising, growing by 1 million credits in Q4. The LCFS is layered into the USWC price of RD and SAF along with the federal blenders tax credit and the value of the RINs, which are the credits used by refiners and other obligated parties to meet the annual renewable volume obligation set by the Environmental Protection Agency's Renewable Fuel Standard. "LCFS price is proportionally one of the smaller drivers in the overall proposition" said Marathon's Partee, adding the average price of D4 RINs is ranging between $1.70 and $1.80 as well as the $1/gal BTC. And with Oregon, Washington and Canada beginning new programs based on California's LCFS program RD producers are anticipating greater demand for renewable fuels and opportunities for more regional credits. Despite low LCFS pricing, Partee said the company is quite happy with results from Marathon's Dickinson, North Dakota, renewables plant which came online last year. "I think it bodes well for the resiliency .... for RD over the long term," he said.

The Asian middle distillates complex is expected to remain volatile during May 4-6, with market participants keenly watching for developments on the possibility of an embargo on Russian oil in the EU, which could lead to importing countries in the EU increasing their reliance on Asian barrels. At 11 am Singapore time (0300 GMT), the front-month July ICE Brent crude oil futures contract was at $105.78/b, up 81 cents/b (0.77%) from the May 3 settlement. Jet fuel/Kerosene ** Activity in the Asian jet fuel/kerosene complex is expected to remain steady to slightly lower later in the week amid ongoing regional holidays, which will see many market participants away from desks. ** While some supply concerns remain -- due to large outflows from China and soaring freight rates which have worsened arbitrage economics and trapped more barrels of jet fuel within the region -- sources said a level of support has been placed under the Asian jet fuel/kerosene market. It has seen a steady increase in demand as more countries reopen borders and with airlines scheduling more flights to meet air travel demand. ** Brokers pegged the balance-month May-June jet fuel/kerosene time spread at plus $5.35/b at 0300 GMT May 4, up 85 cents/b from plus $4.50/b at the Asian close April 29, S&P Global Commodity Insights data showed. ** The FOB Singapore jet fuel/kerosene cash differential was assessed at plus $1.43/b to Mean of Platts Singapore jet fuel/kerosene assessments at the April 29 close, up 15 cents/b, or 11.72%, from the start of the week on April 25, S&P Global data showed. ** Japan's jet fuel stocks rose 4.5% week on week to 4.88 million barrels over April 17-23, according to latest Petroleum Association of Japan data released April 27. The increase comes on the back of a hike in jet fuel output, which rose 10% on the week to 1.19 million barrels for the week ended April 23. The data also showed that Japan's jet fuel outflows were up 7.6% on the week to 543,815 barrels for the week ended April 23. ** The Q3-Q4 jet fuel/kerosene swap spread averaged plus $7.89/b over April 25-29, up from plus $6.91/b the week before. Gasoil ** Increasingly viable arbitrage economics, amid growing expectations of the EU sanctioning Russian oil product exports, are providing an additional measure of support to an already tight Asian gasoil complex. Robust gasoil cracks continue to incentivize refineries to maximize their yield of gasoil, and export any excess barrels. ** Brokers pegged balance-month May-June Singapore gasoil at plus $8.40/b at 0300 GMT May 4, ticking lower by 19 cents/b from plus $8.59/b at the Asian close April 29. ** The May EFS spread was pegged at minus $71.62/mt at 0300 GMT May 4, widening $7.10/mt from minus $64.52/mt at the April 29 close. ** Singapore's onshore commercial middle distillate stocks fell 21.94% week on week to 7.04 million over April 21-27, snapping two straight weeks of increase, Enterprise Singapore data released late April 28 showed. Total inflows of gasoil into Singapore were recorded at 213,024 mt in the week to April 27, outpaced by total outflows of 260,622 mt. ** The Q3-Q4 gasoil swap spread averaged plus $8.98/b over April 25-29, up from plus $7.46/b the week before.

Marathon Petroleum, the largest US refiner, is ramping up rates at its refineries, with expectations of reaching 95% capacity in the second quarter to meet the rising demand for both diesel and gasoline as the summer driving season looms. The company is deferring some planned work to capture the strong current spot market environment, "backloading" the company's 2022 turnaround work, according to Ray Brooks, Marathon's head of refining, on the May 3 results call. "With current demands, we are really seeking to maximize our refining system as indicated by the second-quarter guidance," Brooks said, adding, "what this really means...is that we've looked at some fixed bed catalyst changes that we had planned for [Q2]. We've determined we have a little bit as far as catalyst activity. So we've deferred that out later in the year. "We're working right now to maximize distillate production across our system. Just to give you a little more color on that, that's something that we look at daily, make sure that we're maximizing the total recoverable distillate, the endpoint, and maximizing the front end of the distillate," he said. Increased ULSD exports tighten the USAC market Marathon, like its peers, has been running in maximum distillate mode to take advantage of global rising diesel cracks from tight supplies and backwardation in distillate markets. The company's total exports averaged 200,000 b/d at the end of Q1 and have moved up to an average of 250,000 b/d and 300,000 b/d so far in Q2, with barrels moving primarily into Latin America, but with some barrels moving to Europe. Brian Partee, Marathon's head of clean products, said that increased distillate exports have tightened the US Atlantic Coast market, which is seeing lower European imports as well as lower flows up the Colonial Pipeline, the main conduit of refined products from the USGC refiners to New York Harbor. But this is a function of timing, and the "run-up in the prompt front end of the cycle," he said, allowing Marathon to capture current high diesel prices immediately through export rather than waiting for the time it takes diesel to move up the Colonial Pipeline. However, that dynamic is beginning to ease as the spread between the price of US Atlantic Coast ULSD and USGC export diesel is widening, drawing imports into the USAC. Platts assessments showed USAC ULSD diesel barges held a 91.4 cent/gal premium of USGC ULSD export price May 2, compared with the 33 cent/gal premium so far in 2022. "I think you're reading the tea leaves right as you look forward and think about less Russian exports and European complex starting to find a way to rebalance the New York Harbor market," he told an analyst on the call, adding the Colonial Pipeline is a "forward opportunity, more structural and longer term," he said. Unusual times Restrictions on Russian petroleum exports following its incursion into Ukraine in February have had a particular impact on the global diesel supply. Russian middle distillate exports, which averaged 1.1 million b/d in February, fell to 943,000 b/d in March and 868,000 b/d in April, Kpler data showed. The extreme volatility with distillate cracks and the backwardation of distillate markets is creating an unusual situation in oil markets at a time when refiners historically switch to maximum gasoline mode to build up inventories, which are lagging the five-year average. Total US gasoline inventories stood at 230.8 million barrels for the week ended April 29, according to the most recent Energy Information Administration data. However, like its peers, Marathon is constantly looking at the economics of making diesel versus making gasoline as it prepares for the summer driving season looming at the end of May with the Memorial Day weekend, while looking to take advantage of the backwardation in the diesel market. "Our plan right now is to run really, really full, and run really, really hard during gasoline season this year," Brooks said.