Bloomberg News

European Gasoline Drops; Fuel Oil Premium Advances: Oil Products

August 21, 2012

Gasoline fell in northwest Europe as Glencore International Plc (GLEN) sold on the barge market.

Gasoil gained on the ICE Futures Europe exchange in London as Brent advanced. Low-sulfur fuel oil’s premium to the high- sulfur grade widened to the most in more than four months.

Light Products

Gasoline barges for immediate loading in Amsterdam- Rotterdam-Antwerp traded at $1,090 and $1,094 a metric ton, according to a survey of brokers and traders monitoring the Argus Bulletin Board. That’s at the lower end of deals yesterday from $1,089 to $1,103.

Trafigura Beheer BV purchased 13,000 tons of the 17,000 tons that changed hands. The trades are 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 declined by 4 cents to $14.26 a barrel as of 11:08 a.m. local time, according to data from PVM Oil Associates Ltd., a broker in London.

“In Europe we are watching the water levels on the Rhine which are falling and should accentuate the short-loading of barges and result in some product backing-up in the ARA region,” Olivier Jakob, managing director at Petromatrix GmbH, said today in a note.

Barge freight rates for gasoline to be transported from the ARA-region to Frankfurt rose to 16.80 euros ($21) a ton yesterday compared with 15.80 euros on Aug. 15, according to PJK International BV, a researcher, said by e-mail. A 2,000-ton barge can only load 1,200 tons of product, Patrick Kulsen, founder of PJK, said by phone today.

Naphtha’s discount to Brent widened to $7.70 a barrel from $7.26 yesterday, PVM data show.

Middle Distillates

Gasoil for delivery in September rose $3.50, or 0.4 percent, to $982.50 a ton on ICE as of 1:18 p.m. London time. The more actively traded October contract was at $983 a ton, putting the market in contango after being at parity for the past three days.

Contango is a structure where later-dated deliveries are more expensive than near-term supplies and may signal a future supply constraint or increase in demand.

Gasoil’s crack, a measure of refining profitability, declined to $17.60 a barrel from $17.50 at 4:30 p.m. yesterday. Brent increased 0.6 percent to $114.37 a barrel.

Residues

Low-sulfur fuel oil’s premium to the high-sulfur grade widened. The price spread was at $64 a ton yesterday, the highest since April 5, according to data compiled by Bloomberg.

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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