August 21, 2012 / 5:52 PM / 5 years ago

Europe Distillates-Lack of imports supports prices

LONDON, Aug 21 (Reuters) - Distillate product markets were
steady on Tuesday, supported by the lack of arbitrage
opportunities from Asia and the U.S. and limited production
capacity in Europe due to upcoming refinery maintenance. 
    "The reality is that demand is not very exciting, but there
is not enough product. The arbitrage window is missing, both
from Asia and from the U.S.," said one distillates trader.
    Demand in the Mediterranean was seen to be firmer than in
the north because Turkey along with other countries in the East
were buying both diesel and gasoil.
    The Mediterranean physical market was now on a par with
northwest Europe, traders said, although swaps in the north were
still higher than in the south.
    Refining margins were steady on the day, hovering near
$17.70 a barrel on the ICE platform during the session. Higher
margins in the second quarter helped revive refinery output in
Europe, supporting further increases in processing rates.
    Output at European oil refineries rose again in July, after
increasing by 3.1 percent in June, as producers continued to
take advantage of wider margins for diesel and gasoline, figures
from industry monitor Euroilstock showed on Tuesday.
    Total net refinery output was up 1.5 percent in July from
the previous month, with middle distillates output rising by 1.8
    The refinery maintenance season starts again in September,
when many plants in the region will undergo scheduled work that
will limit capacity and potentially reverse recent increases in
refinery output rates.
    * Gasoil barge premiums were unchanged for a sixth session,
with Vitol selling a barge to Statoil at a discount to September
ICE gasoil futures of $4 a tonne. 
    * September ICE gasoil futures were up 0.79 percent
at $986.75 a tonne at 1809 GMT.
    * The front of the ICE gasoil curve remained slightly
backwardated, with the September/October spread 
trading at minus 50 cents a tonne. 
    * The ICE gasoil crack was at $17.70 a barrel,
1 cent higher than the previous close.
    * In the Mediterranean, three firms were seen bidding for
cargoes while two firms offered. 
    * One bid was at $9 a tonne over October ICE futures, while
the bid/offer spread for cargoes quoted against mean cif Med
prices was minus $5/$2 a tonne.
    * Diesel barges were little changed on Tuesday, trading at
$29 a tonne over September ICE gasoil futures, in line with the
previous day's $28-$29 a tonne fob ARA premiums.
    * Morgan Stanley bought from BP and North Sea Group bought
from P66.
    * No barges of 50ppm diesel traded. On Monday, prices were
at $14-$15 a tonne over September futures.
    * No cargoes traded. In the Mediterranean, Total bid at $35
a tonne over September futures, while Shell also bid for a
cargo. No offers were seen. Premiums were little changed from
    * In the north, SK Energy bid for a cargo at $35 a tonne
over September futures basis Le Havre in France.
    * No barges traded. Shell bid at CCM minus $2.25-$2.50 a
tonne, while BP offered at CCM minus $2 a tonne.
    * On Monday, barges were slightly lower, trading at $78 a
tonne over September ICE gasoil futures and CCM minus $3.00 a
    * No cargoes traded. Vitol and BP offered at $82 a tonne
over September futures, while Morgan Stanley bid up to premiums
of $84 a tonne and Total bid up to premiums of $83 a tonne over
September futures.
    * Premiums for cargoes in the region were little changed
from Monday.
    * Barges of low-sulphur fuel oil (LSFO) with 1 percent
sulphur content were discussed at $711-$714 a tonne fob ARA, up
from $706.50 a tonne fob ARA on Monday.
    * Barges of high-sulphur fuel oil (HSFO) with 3.5 percent
sulphur traded at $651-$653.25 a tonne fob ARA, up from
$641.50-$644 a tonne fob ARA on Monday.

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