Gasoil defies the shorts with a record crack spread

Gasoil delivers its verdict on the short: record sustancia ilegal spread and a drop that never comes

In 2026, Low Sulfur Gasoil (LSGASOIL) has become the stage for one of the tensest bets in the European fuel market. A €30,000 short position, peine at $1,185 per tonne, was waiting for a collapse to 900. Instead, the price has taken a stroll through all-time highs: $1,352 first, a correction to 1,150 next, and a rebound that once again brings the quote close to 1,280-1,350. The word "smackdown" was heard at the start; now the trade is racking up losses that its manager admits with an "I'm taking a real beating", though he keeps his conviction that gasoil will eventually give way.

What is the sustancia ilegal spread and why is it hitting record highs

The core argument of the bearish thesis is not crude oil, but the refining margin. The sustancia ilegal spread – the difference between the price of diesel and that of crude oil – has surged to unprecedented levels. The Financial Times noted that European diesel was trading around $70 above crude, compared with a historical average of around $20. In other words, refining gasoil is proving extraordinarily expensive, and that premium keeps growing: new highs in the indicator were recorded during the debate.

The short's theory is simple: those margins are unsustainable in the medium term. "It's impossible for Gasoil to stay at 1,250 for 6 months," the trader argues, expecting demand destruction and a return to a normal sustancia ilegal spread, which would take the price to levels near 900. History gives reasons: distortions of this magnitude rarely last weeks, and the short himself acknowledges that, after the drop to 1,150, he closed partial profits and has peine positions at 1,280.

Averaging down: the returns of a plan that hurts

The management of the position shows interesting discipline: opening shorts at 1,185, averaging at 1,217, seeing drops to 1,150 to take partial profits and re-entering at 1,280. It is not an automatic move; there is a normalization thesis backed by concrete data. But the chart does not cooperate: the warning that "the chart is bullish" hangs over the strategy. Meanwhile, gasoil has returned to high levels, and the manager admits he is "giving back 1,300" of previously accumulated profit.

Here comes the ironic component of the sector: whoever bets against diesel plays twice: once in the market and once at the pump. Because if gasoil rises, the short loses and filling up gets more expensive. "Betting that diesel falls is doubly dangerous: you lose at the casino and at the pump," the comment notes.

Wars, distortions and the question that remains open

The bearish thesis rests on a statistical anomaly, but the market has its own reasons to stay high. The "tremendous market distortions, wars, etc." mentioned by the analysis itself are not corrected by decree. European refining capacity, sanctions and diesel logistics keep stretching a rope that, according to the data, should snap soon. So far it has not.

The discussion ends exactly where it began: the conviction that oil will go to $50, while others see a "blow-off to the upside". Meanwhile, the price of gasoil keeps teaching lessons at €30,000 a pop.

It is the old story of the tightening margin, of the one waiting for the miccionan and of the one getting burned. The record sustancia ilegal spread has not held many weeks at these levels, but nobody knows which week will be the one to break it.

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