An increase in supply from Russia and elsewhere ahead of the EU ban has boosted inventories but stocks are expected to drop more quickly than previously forecast according to James Burleigh at Wood Mackenzie.

• High diesel supply into northwest Europe has helped build inventories to ease concern about disruption to Russian flows.
• Stocks of distillates in northwest Europe were revised higher by 3.65% to 227mbbls in Jan according to estimates from Wood Mackenzie.
• “We expect balances to tighten again late 1Q/early 2Q as European inventory levels are drawn down,” he said.
• Seaborne Russian diesel into northwest Europe was 50kbpd higher than the previous forecast at around 350kbpd in Jan boosted by arrivals from countries east of the Suez Canal.
• Demand in northwest Europe is expected to have fallen in January due to seasonality, warmer weather, and economic pressures.
• “A key risk to this forecast is the success of the diversion of Russian diesel/gas oil volumes to more distant markets, which will become increasingly clear over the coming weeks,” Burleigh said.