Bloomberg News

European Diesel Advances; Naphtha at 11-Week High: Oil Products

December 20, 2011

Dec. 20 (Bloomberg) -- European diesel barges advanced as PetroChina Co. bought for at least a seventh day. Morgan Stanley and Vitol Group sought to purchase jet fuel on the barge market, without finding sellers.

Naphtha traded at the highest level relative to Brent in 11 weeks, buoyed by demand from Asia. Gasoline’s premium to Brent, or crack, rose to the biggest in more than seven weeks.

Light Products

European naphtha’s discount to Brent narrowed to $4.33 a barrel, the least since Oct. 4, according to PVM Oil Associates Ltd., a London-based broker.

“The Asian naphtha market is looking better,” said Amrita Sen, an oil analyst at Barclays Plc in London.

Korean refiners, which use naphtha in gasoline-making reforming units, operated their plants at record rates last month, the International Energy Agency said in a Dec. 13 report.

The front-month gasoline crack advanced as increasing demand for naphtha cuts the amount of fuel available for gasoline production. The crack was at $3.65 a barrel as of 5:02 p.m. London time, the most since Oct. 28, PVM data show.

Gasoline for immediate loading in northwest Europe traded from $888 to $903 a metric ton, according to a Bloomberg survey of traders and brokers monitoring the Argus Bulletin Board and Platts pricing window. The Eurobob fuel, to which ethanol is added before being sold at the pump, traded from $880 to $891 yesterday. Those prices are for barge lots, usually of 1,000 or 2,000 tons.

Middle Distillates

Gasoil advanced to a three-day high on the ICE Futures Europe exchange in London.

The January contract added as much as $19.75, or 2.2 percent, to $907.25 a ton, the most since Dec. 15 and was at $900.50 a ton as of 5:05 p.m. local time. Barges of the heating oil traded at a $1 premium to front-month gasoil futures, little changed from yesterday, the survey showed.

PetroChina and Vitol were the main buyers on the diesel barge market, where deals were done at premiums of $17 and $18 to January futures. Yesterday’s highest deal was at a $15.50.

Jet fuel didn’t trade in the Platts window, the survey showed. Morgan Stanley sought to buy at a $60 premium to January gasoil while Vitol was prepared to pay $64. Barges of the aviation fuel traded at a $62 premium yesterday.

Residues

Barges of high-sulfur fuel oil, used to power ships, traded from $614 to $616 a ton, the survey showed.

--Editors: Raj Rajendran, Alessandro Vitelli.

To contact the reporter on this story: Rachel Graham in Belfast at Rgraham13@bloomberg.net

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


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