The steady gains for crude oil in 2018 continued through March and UK motorists are now feeling the pinch at the pump, as Opec maintained solid discipline containing output. Benchmark Brent crude oil futures ended March at $68.39/bl, gaining $2.36/bl on the month and are now up by nearly $15/bl in 2019. Retail diesel and petrol prices have risen sharply in March, up by more than 1.5/ppl after failing to keep pace with crude rises for most of the year.

The international gasoline market surged higher in March ahead of a switch in Europe and the US to more expensive summer specifications, leaving plenty of scope for further rises for petrol on the forecourt.

Refiners have suffered from poor and negative margins on gasoline for most of the year with the product selling at a discount to crude oil. But in March alone, the return on a barrel of crude has moved from nothing to nearly $10/bl. High global stocks suggest that the move higher may have been overdone. US demand always picks up in the spring, but the current high prices may limit demand as motorists reconsider plans for long road trips.

The diesel market was more balanced with adequate supplies coming into Europe from Russia and Asia.

The underlying crude price has been buoyed by the lack of sour heavy grades on the market and no end in sight to the chaos in Venezuela or clarity about sanctions against Iran. Opec has historically opened up the taps to help preserve a balanced market, but it is signalling a much tighter stance this time, led by Saudi Arabia. Riyadh says the kingdom will produce 9.8m bl of crude in April, fully half a million barrels below its agreed quota within Opec.

At the FT commodities summit held in Lausanne at the end of March, the heavyweight oil trading companies were generally mildly bullish for the short-term price outlook. Vitol’s chief executive Russel Hardy said: "$60-80/bl is very reasonable for the current market we are mildly positive for the second and third quarters," before noting that a rise to $90/bl or $100/bl would shrink demand and damage the global economy.

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