OIL: Contango for US Diesel and WTI Could Emerge if Diesel Ban Enacted: Sparta

A US diesel ban would see USGC refiners maximise yield shift towards jet and mogas production, before storing any diesel export length, sending heating oil spreads into contango, according to Sparta's June Goh. * Run rates would then be next to suffer once product storage is depleted, Goh added. * The outcome would be directionally bullish US product cracks, except HO/WTI, which would remain compressed. RB/HO would be very supported, Goh said. * WTI/Brent would widen further as US crude needs to find more outlets into Europe and Asia; WTI would even go into contango and incentivise crude restocking, Goh said. * Europe's ICE GO complex would "blow up tremendously," Goh added, and GO E/W will widen further to necessitate diesel flows from Asia into Europe. * A potential consequence of a US diesel export ban could be that Europe enacts a mogas export ban in retaliation, Goh noted.