Goldman Sachs lowers its diesel spread forecast and shifts its bets to European gasoline: Diesel shortages are squeezing gasoline supply.

The tightness in the global fuel market is spreading from diesel to gasoline. A recent report from Goldman Sachs suggests that as refiners increase diesel production to cope with tight supplies, gasoline supply is actually being squeezed, and the supply-demand gap in the gasoline market may widen further. Based on this change, Goldman Sachs has adjusted its commodity trading strategy, believing that gasoline currently has greater upside potential than diesel.

In a report dated September 16, Goldman Sachs analysts Yulia Zhestkova Grigsby and Daan Struyven noted that refiners are shifting more production capacity to diesel, rapidly tightening gasoline supply. This shift in supply structure is the core basis for Goldman Sachs' adjustment of its trading strategy. Meanwhile, gasoline demand remains relatively strong, and the divergence in gasoline and diesel inventory trends further supports gasoline prices.

The global fuel market has been continuously impacted by geopolitical conflicts this year. Continued attacks on Russian refining facilities have further compressed refined product supplies; the US-Iran conflict has also exacerbated market concerns about supply. Against this backdrop, US diesel futures have hit record highs, and retail diesel prices are also at record levels, indicating a continued increase in tightness in the fuel market.

Goldman Sachs turns bullish on 2027 European gasoline contracts

Goldman Sachs has directly adjusted its trading strategy: closing its previous positions betting on widening time spreads between different diesel contracts, and instead recommending a long position in mid-2027 European gasoline contracts .

The report argues that while diesel prices may still have room to rise further, gasoline currently has greater upside potential. The core reason is that refiners adjusting their product mix to supplement diesel supply may come at the expense of gasoline production, thus further tightening the gasoline market.

This transmission mechanism means that refined oil prices may continue to outperform crude oil prices . Even if crude oil price increases are limited, constrained refining capacity and product imbalances could still push up the premium of gasoline and diesel relative to crude oil. Goldman Sachs' shift from diesel to gasoline positions is based on this supply and demand shift.

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