Bloomberg News

Jet Fuel Climbs as Shell Buys; Diesel Barges Drop: Oil Products

May 14, 2012

Jet fuel premiums rose as Royal Dutch Shell Plc (RDSA) bought a cargo and barge in northwest Europe. Diesel and gasoil declined as Brent crude tumbled.

Gasoline dropped to the lowest price in more than three months as refineries in Germany resumed operations following unplanned and scheduled halts.

Light Products

Gasoline barges for loading in Amsterdam-Rotterdam-Antwerp traded at $1,010 and $1,012 a metric ton, according to a survey of brokers and traders monitoring the Argus Bulletin Board. That’s the lowest since Feb. 3 and compares with May 11 deals at $1,013 to $1,022.

Litasco, OAO Lukoil’s trading arm, was the biggest buyer of the Eurobob grade to which ethanol is added to make finished fuel. Trafigura Beheer BV was the main seller. The trades are typically for lots of 1,000 tons or 2,000 tons.

Gasoline’s crack, or premium to Brent, gained to $9.59 a barrel as of 1:49 p.m. local time from $9.13 on May 11, according to data from PVM Oil Associates Ltd., a refined-products broker in London.

Naphtha’s discount to Brent narrowed to $9.36 a barrel from $9.78 in the previous session, PVM data show.

Middle Distillates

Shell purchased the jet fuel cargo from Total SA at a premium of $86 a ton to June gasoil on ICE Futures Europe exchange for delivery to the U.K., according to a similar survey of Platts prices. On May 10, a cargo was sold partly priced at $78 for Le Havre in north France.

Jet fuel barges changed hands at $76 and $79 a ton more than June gasoil, the survey showed. That compares with a May 10 deal at $73.

Diesel barges traded at premiums of $11 to $13 a ton to June gasoil, according to the survey. That compares with May 11 deals at $14.50 and $15.

Gasoil for delivery in June dropped 1.9 percent to $932.50 a ton as of 4:44 p.m. London time on the ICE exchange. The July contract was at $930. That narrows the discount to front-month futures, or backwardation, to $2.50 from $3.50 on May 11.

The August contract was at $929 a ton, making it attractive to buy, according to Bank of America Corp.

“Selling gasoil in July and buying the August contract looks like an appealing trade to us, as we believe the current strong backwardation in the gasoil market will become unsustainable once inventories start to build,” Sabine Schels, a Bank of America analyst in London, said in a May 11 report.

Gasoil’s crack, a measure of refining profitability, fell to $14.36 a barrel from $14.94 on May 11, according to ICE data. Brent decreased 1.1 percent to $111.05 a barrel.

Money managers cut net-long bets on ICE gasoil futures and options to 59,457 in the week ended May 8 from 79,873 in the previous week, ICE data show.

Heating oil barges traded at premiums of $3 to $5 a ton to June gasoil, the survey showed. The fuel with no more than 50 parts per million changed hands at premiums of $11 a ton to the June contract.

Residues

High-sulfur fuel oil traded at $627.50 to $629 a ton, the survey of Platts showed. That compares with deals on May 10 at $635 to $638. The low-sulfur grade changed hands at $670 to $672 today.

Refineries

Shell completed maintenance at its Godorf oil refinery in Germany yesterday, the company said today in an e-mailed statement. The planned works began on May 5. The refinery can process 186,000 barrels of crude a day, according to data compiled by Bloomberg.

OMV AG (OMV) expects running rates to return to normal today at its Burghausen site in Germany after an external power failure on May 10 caused an “unscheduled disruption of operations of major parts” of the facility, the company said in an e-mail. The plant can process 72,000 barrels of crude daily.

Hellenic Petroleum SA plans to start its upgraded Elefsis refinery in Greece at the end of June, a company official said today by e-mail.

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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