July 16, 2012 / 6:49 PM / 5 years ago

Europe Product Swaps-Light cracks largely steady

LONDON, July 16 (Reuters) - Gasoline and naphtha outright
swaps remained supported on Monday by rising crude oil prices
while crack swaps held relatively steady as the United States
continues to draw some gasoline out of Europe. 
    Refinery maintenance and a halt in production at the UK's
Coryton refinery - which produced a high proportion of gasoline
- has also dented supplies.
    Further gains were tempered by weak demand from the West
African market, which remains a weight on gasoline in Europe,
while a surprise build in U.S. gasoline stocks on Wednesday also
dampened the outlook for demand.
    Diesel prices eased but July still held onto a significant
premium to August due to Eni's summer discount on diesel for
Italian consumers every weekend, which is due to continue until
September. 
    "The market is still tight in the prompt," one Italian
refiner said. 
    Other Italian retailers have followed Eni's lead and have
started to offer discounts at the pump to varying degrees. Api,
ExxonMobil, Kuwait Petroleum and ERG are among those, one
Italian refiner said.
    Further gains could come from increased Turkish demand. A
problem with shipping insurance caused by Western sanctions has
caused Iranian oil on its way to Turkey to become stuck in
Egypt. 
    A trader based in Turkey said the state oil firm was likely
to cope by increasing product imports. 
    Jet fuel firmed on the back of a slight pick up demand for
summer travels but cargoes arriving from the Middle East and
India are expected cap further gains.
    
    GASOLINE
    * Balance July gasoline barge swaps were at $988.50 a tonne
fob ARA on Monday, up from $961.91 a tonne last week. The August
swap firmed to $954.50 a tonne up from $925.91 a tonne.
    * The backwardated structure of the curve tightened, with
the July and August spread narrowing to around $27 a tonne from
around $36 a tonne.  
    * Cracks eased slightly with the balance July crack pegged
at $16.51 a barrel, compared with $17.11 a barrel last week. The
structure remained backwardated, with August at $13.43 a barrel
up slightly from $13.08 a barrel.
   
    NAPHTHA
    * July naphtha swaps firmed to $824 a tonne cif NWE, from
$795.50 a tonne last Monday. August swaps were at around $818.50
a tonne up from $789 a tonne. September was pegged at around
$815.00 a tonne.
    * Cracks held relatively steady despite a volatile oil
market but fundamentals remain weak, said one trader. 
    * The July naphtha crack swap was at minus $9.30 a barrel,
up slightly from minus $9.20 a barrel last Monday. The August
crack swap was pegged at minus $9.50 a barrel, slightly up on
the previous week's minus $9.70 a barrel.
    
    DISTILLATES
    * Front month ICE gasoil futures were trading at
$887.50 a tonne at 1721 GMT on Monday, up from $873.75 a tonne
at the close a week earlier.
    * Backwardation at the front of the curve tightened sharply,
with the August/September spread LGO-1=R at around 50 cents a
tonne compared with the July/August spread last week at $5.75 a
tonne.
    * The gasoil curve flattened. August gasoil barges fell to
minus $0.50 to plus $0.50 a tonne, down from $0.50/1.25 a tonne
last week. September also fell to the same price from $1/2 a
tonne last week.
    * The fourth quarter was at $0.25/0.75 a tonne, down from
$0.75/1.50 a tonne.
    * July diesel barge swaps fell slightly to $31.50/33.00 a
tonne, after a sharp rise last week to around $34 a tonne.
    * August barge swaps were at $25.50/26.50 up from $23.50 a
tonne. September swaps were pegged at $26.00/27.00.
    * The backwardated structure of the curve flattened
slightly, with the July/August spread narrowing to around $6 a
tonne from around $10 the previous week. 
       
   JET FUEL
    * August jet fuel swaps rose to around $65.50 a tonne cif
Northwest Europe up from $63.50/64.50 last week. 
    * The curve flattened on the week with the August/Septmeber
spread tightening to around $1 from nearly $3. September held
steady, being bid at $66.50 a tonne, and October was around
$69.50 a tonne.    
    * Jet fuel has strengthened in the front month on the back
of falling gasoil futures, which hit a near 18-month low, as
well as a marginal rise in demand for the summer flying season,
said one trader. 
    * But the strength is expected to be short-lived with long
range vessels arbitrage cargoes due to arrive from India and the
Arab Gulf.
        
    FUEL OIL  
    * The spread between high sulphur and low sulphur fuel oil,
or hilo, firmed on the week. 
    * The July hilo was at around $42.50 a tonne, up from $41 a
tonne. August also rose to $40.00, compared with $39.50 a tonne
last week. 
     * The curve held onto its backwardated structure for a
second week.

 (Reporting by Julia Payne, additional reporting by Jessica
Donati; Editing by Anthony Barker and Alden Bentley)

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