Is middle distillate doomed for the year?

So the correction in oil begins right after option expiry, or have i spoken too soon? Reading a few articles from sell side and buyside analysts, this week seems to be a big week for equities. Where we finish the week seems to be a determinant as to where we will head going forward. Gold seems to have a little breakdown in correlation on its own vs equities, oil and eur and perhaps that is where most macro chaps will have a bit more fun in the coming days. However, 2 things that comes to my attention in the oil barrel.

1) The continued strength in the crude curve, particularly the front end, should be a key alert that perhaps inventories in crude oil globally are easing. While in the US it seems the momentum for a build is stalling, SFOT is not too sure about the global waterborn crude situation to make an exact call at this moment but the spreads are certainly approaching a level where he thinks attention should be paid. Nigeria's Mend group's actions will also be watched now that spreads seems to have taken a bit of momentum.

Jul/Dec09 Brent spread

2) While crude curve has strengthen, product curves, particularly distillates continue to weaken. The situation in middle distillate looks horrible to say the least. Refining margins continue to look healthy, supported by rising Gasoline and Fuel oil cracks, which in turn leads to refiners not cutting as much run as they could. This will lead to more and more middle distillate being produced and stored away, as the latest ARA data shows. The european gasoil time spreads for eg are at its weakest for a while and does not look like conditions, demand/supply dynamics will get better anytime soon.

Jun/Dec09 ICE Gasoil

European gasoil inventory