Global fuel market tightness is now shifting from diesel to gasoline. In its latest report, Goldman Sachs notes that as refiners boost diesel output to tackle supply constraints, gasoline supply is getting squeezed instead, potentially widening the supply-demand deficit for petrol. Based on this shift, the bank has adjusted its commodity trading strategy, seeing greater upside in gasoline compared with diesel.

Goldman analysts Yulia Zhestkova Grigsby and Daan Struyven highlighted in a September 16 report that refiners redirecting more capacity toward diesel is rapidly tightening gasoline supply. This change in the supply structure underpins the bank's revised trading direction. At the same time, gasoline demand has held up relatively well, and the divergence in inventory trends between gasoline and diesel further supports petrol prices.

Fuel markets worldwide have been under persistent pressure from geopolitical conflicts this year. Continued attacks on Russian refining facilities have further reduced refined product supply, while U.S.-Iran tensions have intensified supply concerns. Against this backdrop, U.S. diesel futures have reached record highs, and retail diesel prices are also at historic peaks, with overall fuel market strain climbing steadily.

Goldman Turns Bullish on 2027 European Gasoline Contracts

Goldman has directly reshaped its trading stance: closing its previous position 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 still has room for further gains, gasoline now offers greater upside. The core reason is that refiners adjusting their product mix to replenish diesel supply could come at the expense of gasoline output, further tightening the petrol market.

This transmission mechanism implies refined product prices could continue to outperform crude oil. Even if crude price gains remain limited, constrained refining capacity and product mix imbalances could keep pushing up the premium of gasoline and diesel over crude. Goldman's pivot from diesel to gasoline reflects this evolving supply-demand dynamic.