ICE gasoil August futures settle at $712.25 a ton

ICE gasoil August futures settle at $712.25 a ton

The ICE gasoil August futures contract settled at $712.25 a ton on Thursday, July 2, 2025, marking a significant development in the global energy markets. This price level reflects a continued trend of high diesel prices, driven by various geopolitical and market factors.

The widening of the exchange of futures for swaps (EFS) spread between Asia and Europe has been a notable trend. According to LSEG data, the July price spread between diesel prices in Asia and Europe stretched to a discount of nearly $120 per metric ton, its widest in slightly more than 2-1/2 years [1]. This wide spread has encouraged swing suppliers in India and the Middle East to send their cargoes to Europe to cash in on higher prices.

The August EFS contract, which is currently at a discount of $35 per metric ton, suggests a backwardation market structure where prompt prices are higher than those in future months. This backwardation could potentially reduce the prices of cargoes by the time they reach Europe in the second half of July or August, according to a Singapore-based trader.

The July/August ICE gasoil spread (LGOc1-LGOc2) is currently at $110 per ton, the widest since October 2022 when the European Union imposed an embargo on Russian oil after the Ukraine war. The August/September (LGOc2-LGOc3) spread is at $16-17 per ton in backwardation.

The oil market has been influenced by the OPEC+ decision to increase output more than expected for August. This decision, coupled with concerns about the potential impact of U.S. tariffs, has added volatility to the market. The August WTI crude contract rallied to a high of $68.09 ahead of the close and settled up 93 cents at $67.93 [2].

The ICE gasoil market has also been affected by European refinery outages and the bankruptcy of the UK’s Lindsey refinery, which has raised concerns about potential fuel shortages. Despite these challenges, Asian diesel prices have remained relatively stable, creating financial incentives to move middle distillates to Europe.

In summary, the ICE gasoil August futures contract settling at $712.25 a ton is a reflection of the complex interplay of market dynamics, geopolitical factors, and supply disruptions. The market is likely to continue to face volatility as these factors evolve.

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3T800N:0-july-diesel-east-west-price-spread-hits-widest-in-2-1-2-years-lseg-data-shows/
[2] https://www.spragueenergy.com/concerns-about-the-potential-impact-of-u-s-tariffs/