Bloomberg News

Europe Jet Fuel Falls; Gasoil Backwardation Widens: Oil Products

October 13, 2011

Oct. 13 (Bloomberg) -- Vitol Group bought cargoes of jet fuel in northwest Europe at lower prices than trades yesterday. Diesel’s premium to gasoil rose.

Gasoil’s backwardation, or the premium paid for near-term contracts over later delivery dates, widened as stockpiles plunged to a three-year low. The heating fuel’s crack, or premium to Brent crude, increased.

Light Products

Gasoline for immediate loading in Amsterdam-Rotterdam- Antwerp traded from $957 to $975 a metric ton, according to a survey of traders and brokers monitoring the Argus Bulletin Board. That compares with trades from $956 to $971 yesterday.

Gasoline’s premium to Brent increased to $4.98 a barrel from $4.64 yesterday, according to PVM Oil Associates Ltd., a crude and refined products broker in London.

Naphtha’s discount to Brent narrowed to $6.21 a barrel from $6.91 yesterday, according to PVM.

Middle Distillates

Morgan Stanley sold the jet fuel cargoes at premiums of $72 and $73 a ton to November gasoil, according to a survey of traders and brokers monitoring the Platts pricing window which ends at 4:30 p.m. London time. That compares with trades yesterday at $76 more than the gasoil contract.

Gasoil for November rose 0.4 percent to $922 a ton as of 4:45 p.m. local time on London’s ICE Futures Europe exchange. The contract for December fell 0.8 percent to $911.25 a ton. That widened the backwardation to $10.75, the most since the later-dated contract became cheaper than near-term delivery in early August. A backwardated market may mean a current shortage of supply.

Stockpiles of the heating fuel in northwest Europe dropped 8.1 percent to 2.053 million tons in the week to today, according to PJK International BV, a consultant in the Netherlands. That’s the lowest level since December 2008.

The fuel’s crack, a measure of refining profitability, widened to $13.72 a barrel from $11.47 yesterday, according to ICE data. Front-month Brent declined 1.3 percent to $109.95 a barrel on the ICE exchange.

A gasoil cargo traded at a premium of $25 a ton to November futures, according to the survey of Platts. Vitol sold to Litasco, OAO Lukoil’s trading unit.

Diesel barges traded at premiums of $55 and $57 a ton to November gasoil, according to the survey. That compares with a trade yesterday at a $52 premium.

Litasco bought a diesel cargo from Gunvor Group Ltd. at a $55 a ton premium to November gasoil, the survey showed.

Residues

High-sulfur fuel oil barges changed hands from $627 to $635 a ton, the survey of Platts showed. That compares with trades yesterday from $635.75 to $642 a ton.

Refineries

Repsol YPF SA’s Petronor refinery in Spain said it will carry out a “sequential” halt of its production units after workers called a strike.

Petronor workers will hold a strike from Oct. 14 to Oct. 18, the company said in a statement on its website. The 220,000- barrel-a-day refinery is located near Bilbao in northern Spain.

--With assistance from Joao Lima in Lisbon. Editors: John Buckley, Rachel Graham

To contact the reporter on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net

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


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