Morgan Stanley Buys Europe Jet Fuel, Sells Gasoil: Oil Products

Morgan Stanley bought barges of jet fuel and sold gasoil in Europe’s Amsterdam-Rotterdam-Antwerp oil hub. Gasoline rose as refiners switched their production to produce summer-grade motor fuel.

Light Products

Gasoline for immediate loading traded at $1,076 and $1,080 a metric ton, according to a Bloomberg survey of traders and brokers monitoring the Argus Bulletin Board and Platts trading window, which ends at 4:30 p.m. London time That’s up from $1,063 to $1,066 on April 1. Vitol Group, Mabanaft BV and Cargill Inc. were sellers, while Total SA, Royal Dutch Shell Plc, Vitol and Chevron Corp. were buyers.

Those prices are for so-called barge lots of 1,000 or 2,000 tons of Eurobob grade motor fuel, which is mixed with ethanol before it is sold at the pump. European refiners changed their production on April 1 to produce summer-grade gasoline, which has a higher boiling point than winter specification.

The product’s 14 percent gain in the last month may dissipate if high retail prices temper demand, Olivier Jakob, managing director of Switzerland-based researcher Petromatrix GmbH, said today in a note. “Prices at the pump in Europe are already over the peaks of the summer of 2008.”

Gasoline’s crack, or premium to Brent crude, narrowed 8 cents to $8.17 a barrel in Europe, according to data from London-based broker PVM Oil Associates Ltd.

The spread is “increasingly vulnerable to a correction” given rising crude prices relative to the motor fuel, Harry Tchilinguirian, London-based head of commodity markets strategy at BNP Paribas SA, said in an April 1 report.

Middle Distillates

Gasoil barge discounts widened to $5 and $6 less than April contracts on London’s ICE Futures Europe exchange, the Platts survey showed. That compares with $4.25 to $4.50 on April 1. Morgan Stanley and BP Plc sold to Mercuria Energy Trading SA, Statoil ASA, Glencore International AG and Vitol.

Jet fuel barge premiums were little changed at $79 a ton more than ICE gasoil, according to the Platts survey. Morgan Stanley and Vitol bought from North Sea Group, Gekol Mineraloelhandel, BP and Lukoil, the trading arm of OAO Lukoil.

April gasoil on ICE gained $10, or 1 percent, to $1,010.50 a ton as of 5:08 p.m. London time. The more active May contract advanced 0.9 percent to $1,005.50.

“ICE gasoil is moving to a greater backwardation in the first two nearby months and that will continue to work against holding distillates in storage,” Jakob said, referring to a situation where prompt supplies sell at a premium to later delivery contracts.

The rise in gasoil, used as a benchmark for diesel, may curtail demand for the motor fuel, he said.

Ultra-low-sulfur diesel barges traded at premiums of $12.50 to April gasoil versus $14.50 to $15 on April 1, the survey showed. BP was the only seller, while Mabanaft, Vitol and Total were the main buyers.

Residues

Low-sulfur fuel oil barges traded from $699 to $701 a ton, the survey showed. That’s up from $678 to $688 in the previous session. The high-sulfur grade changed hands from $637 to $639 a ton, compared with $626 to $628 on April 1. Fuel oil is used to power ships and generate electricity.

Refinery

TNK-BP, BP’s Russian venture, started planned maintenance at its oil Ryazan refinery today, Dmitry Sergeev, a Moscow-based spokesman, said in an e-mail.

The refinery has a capacity to process 340,000 barrels a day of oil, according to data compiled by Bloomberg.

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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