Key facts
- Goldman Sachs recommends investors take long positions in European gasoline futures for mid-2027.
- Refiners are prioritizing diesel output, leading to tightening gasoline markets.
- Global diesel stocks are low due to refinery damage in the Middle East and Russia.
- Refinery outages were 60% higher than the seasonal average as of the end of August.
- Goldman Sachs sees more upside potential in gasoline prices compared to diesel.
Goldman Sachs is shifting its market recommendation from diesel to European gasoline for the middle of next year, anticipating greater upside potential in gasoline prices. The investment bank's commodity analysts noted in a September 16 note that refiners are prioritizing diesel production, which is rapidly tightening gasoline markets. This strategic shift comes as the global diesel market faces significant tightness, with refinery activity at its lowest for this time of year since the 2020 pandemic. Goldman Sachs has consistently highlighted the critical state of the diesel market, describing it as the epicenter of the current fuel supply crunch. War-induced refinery outages in the Middle East and Russia have severely impacted global fuel supply, particularly for diesel. While increased output from the Americas and Africa has partially offset these losses, it has only covered about a third of the deficit, according to the bank's commodity team. As of the end of August, refinery outages were reported to be 60% higher than the seasonal average, contributing to critically low global diesel stocks that are expected to remain tight into next year. The overall refined product market has tightened throughout the summer, with refining margins reaching record highs due to a more constrained supply of petroleum products compared to crude oil. Despite diesel futures being set for further increases, Goldman Sachs believes gasoline now presents more significant price upside opportunities.