Bloomberg News

Europe Gasoil Discount Widens; Jet Imports to Drop: Oil Products

January 16, 2012

Jan. 16 (Bloomberg) -- European heating oil barge discounts widened relative to February gasoil on London’s ICE Futures Europe exchange. Vitol Group bought a barge of diesel at a stable premium versus the previous session. There were no deals in the cargo market.

Shipments of jet fuel to Europe from India and the Middle East are set to decline for the second month to the lowest since at least March, according to reports from four shipbrokers including Delhi-based Interocean Shipping.

Light Products

Gasoline for immediate loading in Amsterdam-Rotterdam- Antwerp changed hands at $954 to $957 a metric ton, according to a survey of brokers and traders monitoring the Argus Bulletin Board and Platts pricing window, which ends at 4:30 p.m. London time. That compares with deals on Jan. 13 at $945 to $956.

Royal Dutch Shell Plc and Cargill Inc. bought from Chevron Corp., Mabanaft BV and Gunvor Group Ltd. The deals are for Eurobob grade, to which ethanol is added to make finished fuel.

Gasoline’s crack, or premium to Brent crude, shrank to $3.43 a barrel from $3.48 the previous session, according to data from PVM Oil Associates Ltd., a London-based broker.

Naphtha’s discount to Brent widened to $7.30 a barrel from $7.07 on Jan. 13, PVM data showed.

Middle Distillates

Barges of gasoil traded at bigger discounts to February gasoil, the Platts survey showed. Mabanaft sold to Gunvor at $3 and $3.50 a ton less than February gasoil, compared with $3 the previous session.

Ultra-low-sulfur diesel barges changed hands at a premium of $17 a ton to February gasoil, according to the survey. That’s unchanged from Jan. 13. North Sea Group sold to Vitol, ConocoPhillips and BP Plc.

“Premiums for European low-sulfur diesel have increased from their December lows but cannot be described as strong,” Olivier Jakob, managing director of Switzerland-based consultant Petromatrix GmbH said in a report. The fuel is trading at less than its 100-day moving average and “the current record consumer price for diesel in Europe will not be a positive factor for demand,” he said.

Jet fuel didn’t trade in the barge or cargo markets. A total of 718,000 tons were booked or provisionally scheduled to be arrive in Europe this month, compared with 843,000 in December and 1.5 million in November, reports from the four shipbrokers showed.

Gasoil for February gained 0.7 percent, or $6.50, to $959 a ton at 5:14 p.m. local time on the ICE exchange. The March contract gained 0.7 percent to $958.

February’s premium to the next month narrowed to $1 from $1.25 on Jan. 13. This market structure is known as backwardation, or a situation where near-term deliveries are more expensive than future supplies.

Gasoil’s crack, a measure of refining profitability, rose to $17.28 a barrel at 4:30 p.m. from $17.07 the previous session, according to ICE data. Brent advanced 0.7 percent to trade at $111.20 a barrel on ICE.

Residues

High-sulfur fuel oil traded at $672.25 to $679 a ton, according to the survey of Platts. That’s more than Jan. 13 deals at $663 to $671.25.

--With assistance from Rob Sheridan and Helena Athanasiou in London. Editors: Raj Rajendran, Rachel Graham.

To contact the reporter on this story: Lananh Nguyen in London at lnguyen35@bloomberg.net

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


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