Bloomberg News

European Diesel at 13-Month Low; Naphtha Advances: Oil Products

January 22, 2013

Diesel premiums in northwest Europe fell to the lowest in 13 months as Argos Groep BV and BP Plc (BP/) sold on the barge market.

European naphtha rose to the highest in almost three weeks. Gasoil futures in London traded at the highest for the time of year since at least 2004 as temperatures drop.

Light Products

Vitol Group and Trafigura Beheer BV sold naphtha cargoes at $942 and $943 a metric ton, according to a Bloomberg survey of traders and brokers monitoring the Platts pricing window. That’s the highest since Jan. 3 and compares with $929 and $930 yesterday. Glencore International Plc (GLEN) and BP bought.

Naphtha’s crack, or discount to Brent, shrank for a fourth session to $6.33 barrel as of 2:33 p.m. London time, according to PVM Oil Associates Ltd., a crude and refined products broker. It was at $6.83 yesterday.

Gasoline in the Amsterdam-Rotterdam-Antwerp oil hub traded from $988 to $1,002 a metric ton, according to a similar survey of the Argus Bulletin Board. That’s the highest since Oct. 19 and compares with $981 to $986 yesterday, data compiled by Bloomberg show.

Gunvor Group Ltd. and Chevron Corp. (CVX:US) sold the Eurobob grade, to which ethanol is added before being sold at the pump. BP, Cargill Inc. and Argos bought.

Cargoes of premium unleaded gasoline traded at $1,027 a ton, the survey of Platts showed.

Gasoline’s crack, or premium to Brent, rose to $8.29 a barrel, according to PVM data. That’s the most since Oct. 12.

Cracks rose to the highest level in five years in 2012, possibly because of reduced availability of blending components for motor fuel during the driving season in Europe and North America, according to JBC Energy GmbH.

Supply has dropped as refiners add more diesel-making capacity, the researcher said today in a note. This is “in part responsible for some of the spikes in gasoline cracks witnessed last year,” it said.

Middle Distillates

Diesel barges traded at $9 and $10 a ton more than February gasoil on the ICE Futures Europe exchange in London, the survey of Platts showed. That’s the lowest since Dec. 19, 2011, according to data compiled by Bloomberg. Two barges traded at a $3 discount to the benchmark prices, down from parity the previous session.

Heating oil barges traded at parity to February gasoil and at plus $1 to the marker, down from plus $2 yesterday, the Platts survey showed. Argos, OAO Lukoil’s Litasco unit and Royal Dutch Shell Plc (RDSA) sold to Morgan Stanley, Vitol and Mocoh SA. The low-sulfur grade changed hands at a $7 premium, versus plus $6 yesterday.

Air France-KLM sold two barges of jet fuel to Vitol at a $72 a-ton premiums to February gasoil, the survey of Platts showed. That compares with plus $71 and $73 yesterday.

Gasoil for February delivery rose as much as $8.75, or 0.9 percent, to $973.25 a ton on the ICE exchange in London, the highest since Oct. 30.

Front-month prices were at $970.25 on ICE as of 5:18 p.m. local time, the most for the time of year since at least 2004, data compiled by Bloomberg show.

“Temperatures across the European Union have plummeted, helping push gasoil prices higher,” Abhishek Deshpande, an oil markets analyst at Natixis SA, said in an e-mailed response to questions.

Temperatures will drop to minus 8 Celsius (17.6 Fahrenheit) in Frankfurt tomorrow and minus 9 on Jan. 26, according to CustomWeather Inc. data. That compares with a five-year average of minus 1. Germany is Europe’s largest market for the fuel.

February futures traded at a premium of $8.75 a ton to the March contract, compared with $8.25 yesterday, as the market trades for a second week in backwardation. This market structure can signal rising near-term consumption or reduced supply.

Gasoil’s crack widened to $16.96 versus $16.72 yesterday. Brent advanced 0.4 percent to $112.11 a barrel.

Diesel-making capacity in Europe has increased by 360,000 barrels a day in the past five years even as crude refineries are halted, according to JBC Energy.

Residues

High-sulfur fuel oil changed hands from $608 to $609 a ton, the survey of Platts showed. That compares with $612 to $612.50 in the previous session. The low-sulfur grade traded at $638 a ton, versus $639 yesterday.

To contact the reporter on this story: Konstantin Rozhnov in London at krozhnov@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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