GOLDMAN Sachs commodity strategists Yulia Zhestkova Grigsby and Daan Struyven warned Wednesday that refiners prioritizing diesel output are rapidly compressing gasoline supplies, raising the risk of sharp price moves ahead.
U.S. diesel has already hit a record $6.40 a gallon, according to AAA data, while gasoline trades at $4.44—leaving room for significant upside if Middle East or Russia-Ukraine conflicts extend refinery outages or damage energy infrastructure, the strategists said in a Sept. 16 note titled "High Diesel Prices Cause High Gasoline Prices."
The production shift reflects diesel's higher margins. Grigsby and Struyven recommended buying European gasoline for June 2027 delivery and closed a European diesel spread position, realizing a 45 percent gain. They said diesel prices already embed a substantial premium for future disruptions.
In fixed-income markets, the 10-year U.S. Treasury yield fell to 4.98 percent as bond prices rose. Brent crude dropped two percent to $103 a barrel on signals from Saudi Arabia about capacity restoration. Gold fell one percent as higher policy rates continued to weigh on non-yielding assets.
