Steep Backwardation in European Diesel

Europe’s diesel markets are flashing signs of tightness, with near-term diesel contracts on Tuesday hitting the steepest backwardation--a situation where futures contracts for prompt delivery are more expensive than those further down the curve--since March. Backwardation is often interpreted as a sign of limited supply, with traders now willing to pay a premium for fuel that’s available sooner. In contrast, Europe’s natural gas prices have pulled back sharply, with Title Transfer Facility (TFF) natural gas futures falling to…