Bloomberg News

European Gasoil Rises as BP Buys; Diesel Advances: Oil Products

January 26, 2012

Jan. 26 (Bloomberg) -- Gasoil discounts narrowed in Europe as BP Plc bought barges of the heating fuel. Diesel advanced relative to gasoil on the ICE Futures Europe exchange in London.

Petroplus Holdings AG’s administrators said they will resume fuel shipments from the 220,000 barrel-a-day Coryton refinery in the U.K.

Light Products

Gasoline barges for immediate loading in Amsterdam- Rotterdam-Antwerp traded at $980 to $990 a metric ton, according to a survey of brokers and traders monitoring the Argus Bulletin Board. That’s the most since Oct. 17 and compares with deals yesterday at $970 to $982.

Cargill Inc. and OAO Lukoil’s trading unit Litasco bought barges of the Eurobob grade, to which ethanol is added to make finished fuel. Cargill also sold, along with Morgan Stanley and Gunvor Group Ltd.

“The sudden raft of closures of U.S. and European refineries has injected some life into the otherwise ailing downstream sector,” Amrita Sen, an analyst at Barclays Plc in London, said in a note today.

Stoppages of three Petroplus Holdings plants and reduced runs at two others, along with Hovensa LLC’s decision to close its St. Croix refinery in the U.S. Virgin Islands, are among the outages boosting refining profits this month, the bank said.

Gasoline’s crack, or premium to Brent crude, fell to $7.21 a barrel, according to PVM Oil Associates Ltd., a crude and refined products broker in London. It jumped to $8.05 a barrel yesterday, the most since Aug. 31. Naphtha’s discount to Brent widened to $4.21 from $3.94 the previous session, PVM data show.

Middle Distillates

Royal Dutch Shell Plc was the main seller of heating oil, according to a survey of brokers and traders monitoring the Platts pricing window, which ends at 4:30 p.m. London time. The product traded at a discount of $2 a ton to February gasoil on the ICE Futures Europe exchange. That’s the highest in two weeks. BP and Gunvor were the main buyers.

Ultra-low-sulfur diesel traded once at a premium of $16 a ton to February gasoil. Shell sold to Omneo Trading. That’s up from the last deals at $14.50 to $15 on Jan. 24. Total SA also sold a 20,000-ton cargo of diesel to Mercuria Energy Trading SA at $1 premium to the French benchmark price.

Gasoil for February increased 0.5 percent to $946.75 a ton at 5:25 p.m. local time on the ICE exchange. The March contract gained 0.6 percent to $948.75. The front-month contract’s discount to the second month, a price structure known as a contango, grew to $2 from $1.25 yesterday.

Gasoil’s crack, a measure of refining profitability, shrank to $16.29 a barrel at 4:30 p.m. from $16.59 yesterday, according to ICE exchange data. Front-month Brent rose 1.1 percent to $111.03 a barrel on ICE.

Residues

High-sulfur fuel oil traded at $670.50 to $679 a ton, according to the survey of Platts. Yesterday’s deals were struck from $665 to $670. The low-sulfur grade $678 and $680 traded at a ton, compared with $668 to $670 the previous session.

Refineries

Steven Pearson, an administrator for Petroplus’s Coryton refinery, said the plant will resume fuel shipments “with immediate effect” in an e-mailed statement today.

The facility, running at reduced capacity after Petroplus had $1 billion in credit lines frozen last month, supplies about 20 percent of southeast England’s fuel, according to Unite, the U.K.’s biggest union. Petroplus this week announced plans to file for insolvency.

Two oil tankers were anchored on England’s southeast coast near the refinery, according to AISLive ship-tracking data on Bloomberg.

--With assistance from Claire Borchers and Brian Swint in London. Editors: John Buckley, 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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