Bloomberg News

BP Buys European Jet Fuel; Trafigura Sells Naphtha: Oil Products

October 12, 2011

Oct. 12 (Bloomberg) -- BP Plc and Vitol Group bought jet fuel cargoes at a lower price than last week. OAO Lukoil’s Litasco secured its third diesel shipment this week.

Gasoil advanced on London’s ICE Futures Europe exchange for the fifth time in six days. Trafigura Beheer BV sold a naphtha cargo for more than a deal yesterday.

Light Products

Trafigura sold 12,500 metric tons of naphtha to BP Plc for $911 a ton for delivery to Rotterdam, according to a Bloomberg survey of traders and brokers monitoring the Argus Bulletin Board. Trades were done at $887 and $892 in the past two days.

Gasoline’s premium to naphtha, or reforming margin, is at the highest level in more than four weeks, data compiled by Bloomberg show. This may motivate European refiners to use more naphtha in gasoline, according to Vienna-based JBC Energy GmbH.

“Considering the weak naphtha cracks, this would incentivize upgrading naphtha to gasoline,” JBC analysts led by David Wech said in a report today.

European naphtha’s discount to Brent was at $6.69 a barrel today, rebounding from yesterday’s three-month low, according to PVM Oil Associates Ltd., a London-based broker.

Gasoline for immediate loading in Amsterdam-Rotterdam- Antwerp traded from $956 to $971 a ton, according to a Bloomberg survey monitoring the Argus Bulletin Board and Platts. That less than yesterday’s lowest trade of $963 for the Eurobob grade, to which ethanol is added to make finished tons.

Middle Distillates

Royal Dutch Shell Plc sold 30,000 tons of jet fuel to BP, while Mercuria Energy Trading SA sold the same volume to Vitol, the survey showed. Both deals were partly priced at a premium of $76 to November ICE gasoil. Vitol bought a shipment on Oct. 7 at a premium of $85 to the same contract.

Shell and Koch Industries Inc. failed to secure buyers for jet fuel on the barge market, offering fuel at premiums of $81 and $84 to November gasoil futures respectively. No deals were done yesterday.

Litasco bought 10,000 tons of diesel from Gunvor Group Ltd., the survey showed. Today’s deal was at a $52 premium to November futures, compared with $47 yesterday.

Gasoil for November delivery added $12.25, or 1.4 percent, to $917.50 on the ICE exchange as of 5:01 p.m. London time. That contract’s premium to December futures was $8.25 a ton, keeping the market in so-called backwardation.

A market is described as being backwardation when contracts closest to expiry cost more than later-dated shipments. This usually signals near-term scarcity of supply or rising demand.

Residues

Low-sulfur fuel oil traded from $655 to $656 a ton. High- sulfur barges changed hands from $635.75 to $642 a ton, the survey showed.

Refineries

OMV Petrom SA will shut its Romanian Petrobrazi refinery for six weeks of maintenance in the middle of April, Bertram Muchan, plant operations manager, said. Crude distillation and coker units will be worked on during the halt.

--Editors: Raj Rajendran, Rob Verdonck.

To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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