Bloomberg News

Europe Diesel Premium Drops; BP Buys Gasoil Barges: Oil Products

February 02, 2012

Feb. 2 (Bloomberg) -- European diesel barges traded at a smaller premium to February gasoil on London’s ICE Futures Europe exchange. BP Plc bought barges of heating oil within yesterday’s trading range.

Petroplus Holdings AG, the European refiner that filed for insolvency last month, has enough crude at its Ingolstadt refinery in Germany to last until the end of February at current operating rates, according to the administrator.

Light Products

Gasoline for immediate loading in Amsterdam-Rotterdam- Antwerp traded from $993 to $1003 a metric ton, according to a survey of brokers and traders monitoring the Argus Bulletin Board. That compares with deals from $1,007 to $1,017 yesterday, the highest since Sept. 16, according to data compiled by Bloomberg. The prices are for barge transactions, usually of 1,000 or 2,000 tons.

Mabanaft BV was the main seller, while OAO Lukoil’s Litasco unit also sold one consignment of Eurobob grade, to which ethanol is added to make the finished motor fuel. Cargill Inc., Royal Dutch Shell Plc, BP and Trafigura Beheer BV bought.

Prices dropped after consumption in the U.S., the continent’s main export market, fell to the lowest in 10 years. U.S. demand declined 1.6 percent last week to 7.97 million barrels a day, an Energy Department report showed yesterday. The government said inventories of gasoline climbed 3.02 million barrels to 230.1 million in the seven days ended Jan. 27, an 11- month high. Rising inventories and declining demand may curb export opportunities for European refiners.

The front-month gasoline crack, or premium to Brent, dropped to $7.15 a barrel from $8.07 yesterday, according to data from PVM Oil Associates Ltd., a London-based broker. The spread rose to an eight-month high of $10.11 on Jan. 27.

Shell bought a cargo of naphtha from Trafigura at $980 a ton, according to a survey of traders and brokers monitoring the Platts pricing window. That’s up from a Jan. 15 trade at $954.

Naphtha’s discount to Brent widened to $4.07 a barrel from $3.48 in the previous session, PVM data showed. That’s the biggest gap since Jan. 24.

Middle Distillates

Ultra-low-sulfur diesel changed hands at $16.50 and $17 a ton more than February gasoil, down from $18 yesterday, the Platts survey showed. Vitol Group and Gunvor Group Ltd. sold to BP, Mocoh SA and Cargill.

Barges of heating oil traded at discounts from $1 to $2 to ICE gasoil, little changed from the previous session, the survey showed. Mabanaft and Vitol sold to BP and North Sea Group. The low-sulfur grade changed hands at a $15 a ton premium, up from a deal at $13.50 on Jan. 27.

Gasoil for February delivery fell 0.8 percent, or $7.50, to $947.75 a ton on the ICE Futures Europe exchange in London as of 5:10 p.m. local time.

The product’s crack, a measure of refining profit, was at $15.67 a barrel at 4:30 p.m., versus $16.20 yesterday, according to ICE data. Brent crude fell 0.2 percent to $111.29 a barrel.

Residues

High-sulfur fuel oil traded at $657.50 to $665 a ton, falling from $666 to $675.25 a ton yesterday, the survey showed. The low-sulfur grade changed hands at $676 to $677 a ton, compared with a trade at $682 on Jan. 27.

Refineries

Petroplus’s 110,000 barrel-a-day refinery in Germany is running at 40 percent of capacity, Sebastian Brunner, a spokesman at Jaffe Rechtsanwaelte Insolvenzverwalter, said today by mobile phone from the facility. The German administrator is in talks to secure crude supply, he said.

--With assistance from Claire Borchers and Rachel Graham in London, Barbara Powell in Dallas and Ksenia Galouchko in New York. Editors: Rob Verdonck, Alessandro Vitelli

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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