Bloomberg News

Naphtha Falls to 19-Month Low; Shell Buys Jet Fuel: Oil Products

June 01, 2012

European naphtha plunged to the lowest in 19 months as Vitol Group sold a cargo.

Royal Dutch Shell Plc bought barges of jet fuel at lower premiums to gasoil than yesterday. Gasoil futures fell to the lowest level in more than 15 months as Brent crude plunged to less than $99 a barrel.

The market will be closed on June 4 and June 5 because of public holidays in the U.K.

Light Products

Morgan Stanley bought the 12,500-ton naphtha cargo at $747 a metric ton, according to a survey of the Platts pricing window which ends at 4:30 p.m. London time. That’s the lowest price since Oct. 27, 2010, according to data compiled by Bloomberg.

Naphtha’s discount to Brent narrowed to $12.84 a barrel from $13.82 yesterday, data from PVM Oil Associates Ltd., a broker in London show.

European producers may ship four times as much naphtha to Asia in June than they did a year earlier as sluggish global demand leads to the worst refining losses on the feedstock in six months.

At least 400,000 tons of the fuel, used to make gasoline and petrochemicals, may be transported to Asia, according to the median estimate of seven traders and shipbrokers surveyed by Bloomberg yesterday. That’s the same amount as last month and quadruple the 100,000 tons shipped in June last year.

Gasoline barges for immediate loading in Amsterdam- Rotterdam-Antwerp changed hands from $936 to $975 a ton, according to a survey of brokers and traders monitoring the Argus Bulletin Board and Platts. That’s the lowest since Dec. 30 and compares with yesterday’s deals at $965 to $986.

The trades were for Eurobob grade to which ethanol is added to make finished fuel. Barge deals are typically for lots of 1,000 tons or 2,000 tons.

Gasoline’s premium to Brent dropped to $9.91 a barrel as of 2:59 p.m. local time, PVM data show. That’s the lowest spread since May 17.

Middle Distillates

Shell bought jet fuel barges at premiums of $70 and $71 a ton to June gasoil, the survey of Platts showed. BP Plc and Vitol sold. That compares with a deal yesterday at $74.

Diesel barges traded at premiums of $14 and $14.25 a ton to June gasoil, the survey showed. That’s higher than deals yesterday at $13.

Heating oil barges traded at premiums of $1 to June futures, according to the survey.

Gasoil for June delivery dropped as much as $26, or 3 percent, to $844.75 a ton, the lowest intraday price since Feb. 8, 2011. The contract traded at $851.25 as of 5:06 p.m. local time on the ICE Futures Europe exchange in London. The July futures contract was at $845.75, widening its discount to $5.50 from $4 yesterday.

Gasoil’s crack, a measure of refining profitability, rose to $14.90 a barrel from $14.43 yesterday, ICE data show. Brent plunged 3.1 percent to $98.70 a barrel. That’s the lowest since Jan. 27, 2011.

Residues

High-sulfur fuel oil traded at $563 to $564.50 a ton, the survey of Platts showed. That’s lower than yesterday’s deals at $585.25 to $591.

Refineries

The Petit-Couronne refinery in France, owned by Petroplus Holdings AG before it filed for insolvency earlier this year, will start operating on June 14 under a tolling arrangement with Shell.

Shell will provide 100,000 barrels a day of crude to be refined and sold by Petroplus Marketing France, according to a statement from Petroplus Raffinage Petit-Couronne, which has been under court administration since Jan. 25.

Statoil ASA will be able to deliver fuel from Norway’s biggest refinery after striking government workers agreed to make exceptions for individual ships, delaying a potential halt.

Pilot boat workers on strike agreed to grant dispensation for the most “critical” shipments of refined products from the Mongstad refinery on Norway’s west coast, Statoil spokesman Morten Eek said today. The exemptions from the Confederation of Vocational Unions buys a few more days, Eek said.

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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