LONDON, Nov 18 The forward curve of Europe's
middle distillate benchmark ICE gas oil futures remained in a
steep contango, as warm weather continued to depress demand for
heating oil from Germany.
Traders said middle distillate volumes in floating storage
are expected to rise to almost 100 million barrels in December.
"You've got a very depressed cash market and very warm
weather -- Europe needs to experience a very big bout of cold
weather to get the heating oil market moving with German stocks
so high," one trader said.
"The high levels of floating storage are going to act as a
break on this market -- distillates can stay at sea for a very
long time without any reduction in quality, and when some
contracts come to the end of their time offshore more product is
getting rolled off to replace them."
Fuel oil prices in Europe rose on Wednesday, boosted by
strong demand from shipping firms amid signs of a pick-up in the
ICE GAS OIL
* December gas oil futures LGOc1 were $638.75.00 a tonne,
up 1.12 percent by 1734 GMT.
* The contango to January was around $11.25 a tonne, firm
from Tuesday and close to its widest level since early August.
* The prompt crack eased about 20 cents to $7.65 a barrel.
* Brent crude futures LCOc1 rose 57 cents to $79.54 a
* Traders said relatively warm weather in Germany was
dampening sentiment in the inland market.
* Swaps showed no signs of recovery in the differentials,
with December at discounts of around $9/$10 a tonne fob ARA to
benchmark and $7.50/$8.50 discounts for January for the second
* Barges of gas oil with 0.1 percent sulphur were offered at
discounts of $10 a tonne fob ARA to December ICE gas oil futures
and bid at $11 discounts, compared with deals at $6/$8 discounts
* In mid-November last year, gas oil barges traded around
$0.50/$5 premiums to benchmark.
* In the Mediterranean, 0.1 percent sulphur was bid at
December plus $5 a tonne cif, unchanged from Tuesday's deals.
* The East/West spread swaps were $2.50/$3.50 premiums for
Europe in December, suggesting the arbitrage imports from Asia
may be limited on paper.
* In the Mediterranean, Eni continued to be on the buy side.
It was bidding the French winter spec at December plus $13 a
tonne cif, for the second day running.
* The French winter spec in Northwest Europe has remained at
slight discount to the Mediterranean since late last week. UK
spec was bid relatively actively at around plus $19 a tonne cif.
* French winter spec was bid at December plus $12.75 a tonne
cif NWE, up $1.75 from Tuesday.
* Jet cargoes were discussed between plus $49 and plus $53
CIF Rotterdam. Barges were discussed at December plus $42 and
$44 a tonne fob ARA, steady from Tuesday.
* Swaps rose about $1 across the curve for the second day,
with December at $49.50/$50.00 a tonne cif and $51.50/$53.50
FUEL OIL <EURO/DIFF/FO>
* High sulphur fuel oil (HSFO) barges with 3.5 percent
sulphur traded at $459-$461 a tonne fob ARA, compared with
$452-$454 on Tuesday.
* HSFO's crack to dated Brent was a little stronger at minus
$5.75 a barrel from minus $6 a barrel on Tuesday.
* Fuel oil with 1 percent sulphur traded at $486 a tonne
while 1.5 percent fuel oil traded at $479 a tonne. Both were up
by around $7 on Tuesday's levels.
(Reporting by David Sheppard; Editing by Sue Thomas)