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Europe Distillates-Diesel firm, seen stronger
September 17, 2012 / 4:42 PM / 5 years ago

Europe Distillates-Diesel firm, seen stronger

LONDON, Sept 17 (Reuters) - Diesel margins were supported by
tight supply on Monday, with traders seeing scope for further
strength.
    "North West Europe refinery maintenance will push the
ARA/Rhine supply envelope short," a trader said.
    Limited supply due to refinery closures for maintenance in
Europe, and recent outages in the Americas due to maintenance, a
fire and a hurricane has pushed up margins for refiners, in some
instances to multi-year highs.
    Oil trader Gunvor will shut its newly acquired Belgian
refinery for planned maintenance work set to last around five
weeks, trade sources said on Monday. 
    Workers at Portuguese oil company Galp started a
three-day strike on Monday that affected some of its crude
refining operations, but the company said fuel supplies
continued to flow normally.
    However fuel prices at close to all-time record levels was
denting demand, and analysts said that this should limit growth
in margins.
    "If the flat price of oil starts to pick-up on a QE theme we
will not be bullish the gasoil crack, because flat price is
already at a level the hurts oil demand and that will not
improve on a QE rally," Olivier Jakob at Petromatrix in Zug
said. 
    "The Gasoil crack is already at a strong level and does not
need to go at a much higher level to maximize production."
    India reduced subsidies for diesel last week, leading to
raised prices, which many see as pressuring demand. 
    "In line with the price changes, we expect diesel demand
growth in India to slow down from this year's 10 percent to
around 5.5 percent in 2013," said JBC Energy in a note to
clients.
    Asia's oil refineries are readying to cash in on a diesel
supply crunch that will keep prices high in the next few years
as big regional consumers such as Australia step up imports,
while refineries in Europe and Japan are closing down.
 
    
    GASOIL 
    * One gasoil barge traded at a discount to the October ICE
gasoil futures of $4 a tonne fob ARA, in line with Friday's
deals. North Sea Group sold the barge to Mercuria.
    * One barge of 50 ppm gasoil traded at a premium to October
gasoil futures of $17.50 a tonne fob ARA, up 50 cents from the
previous session. North Sea Group sold again to DS.
    * At 1542 GMT, October ICE gasoil futures were down
0.32 percent at $1,010.25 a tonne.
    * The ICE gasoil crack LGO-LCO1=R was at $18.94 a barrel,
up slightly from $18.82 a barrel around the same time on Friday.
    * The October/November backwardation LGO-1=R was at $3.50,
widening from Friday's close at $2.25 a tonne. 

    DIESEL ULSD10-BD-ARA
    * Eight diesel barges of intermediate quality traded. Vitol
sold seven barges, while Unipec sold the other. Buyers were
Total, SK Energy and Glencore.  
    * The deals were done at premiums to October gasoil futures
of $30-$31 a tonne fob ARA, up slightly from the $29-30 a tonne
seen in the previous session. 
    * Vitol sold a cargo to Total at October ICE gasoil futures
plus $43 a tonne cif NWE,and Shell sold to BP at ICE October
gasoil futures plus $42 a tonne Cif NWE, in line with trades on
Friday.
        
    JET FUEL JET-BD-ARA
    * No barges traded in the window. There were offers at 
premiums to October ICE gasoil of $87-$89 a tonne fob ARA, to in
line with the most recent offers, seen on Thursday.
    * No jet fuel cargoes traded either. Bids came at premiums
to October ICE gasoil futures of $84-$89 a tonne cif NWE, below
the $90-$94 a tonne seen for bids on Friday. There was an offer
at ICE October gasoil futures plus $86 a tonne cif NWE.
    * Illustrating the impact of high jet fuel prices, Qatar
Airways, made a small net loss in the last financial year which
ended in March because of high oil prices, its chief executive
said on Monday. 
    
    FUEL OIL 
    * Barges of low-sulphur fuel oil (LSFO) with 1 percent
sulphur content traded at $719-$721 a tonne fob ARA, down from
the $725-$726 a tonne on Friday.
    * Barges of high-sulphur fuel oil (HSFO) with 3.5 percent
sulphur content traded at $660-$661 a tonne fob ARA, down from
$663.50-$665 a tonne the previous session.

 (Reporting by Simon Falush, editing by William Hardy)

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