European front-month gasoil’s premium to later-dated contracts on the ICE Futures Europe exchange fell amid speculation that colder weather will bolster demand for heating oil.
Gasoline’s premium to Brent, or crack, dropped from the highest level in almost eight months.
Naphtha’s discount to Brent widened to $1.95 a barrel, according to data from PVM Oil Associates Ltd., a London-based broker. That compares with $1.88 at the end of last week, the least since May 10.
Rising propane prices are making naphtha more attractive for use in petrochemicals, according to Petromatrix GmbH, a Switzerland-based researcher. Propane’s discount to naphtha narrowed to $27 a metric ton today from $106.50 on Jan. 12, according to data compiled by Bloomberg.
“Propane has also surged and is making naphtha more competitive,” Olivier Jakob, managing director at Petromatrix, said today in a note.
Gasoline (MOGEEURB) for immediate loading in Amsterdam-Rotterdam- Antwerp traded at $993 to $1,002 a ton, according to a survey of brokers and traders monitoring the Argus Bulletin Board and Platts pricing window. That compares with deals from $985 to $1,020 on Jan. 27. Those prices are for Eurobob grade fuel, to which ethanol is added to make the finished motor fuel.
The front-month gasoline crack, or premium to Brent, dropped to $9.11 a barrel, PVM data show. That compares with $10.11 on Jan. 27, the highest since May 31.
Gasoil futures for February were at $953 a ton on ICE as of 5:08 p.m. local time. The contract’s discount to March futures dropped to 75 cents from $1.25 at the end of last week.
A narrowing discount usually signals rising demand or near- term scarcity of supply. Parts of Germany will have a “serious” frost today and tomorrow, with temperatures forecast to fall to 14 degrees Celsius (6.8 Fahrenheit), according to Germany’s National Weather Service.
“Winter is finally coming to Europe and this week should witness temperatures well below normal,” Jakob said. “Heating oil consumption will start to increase.”
Gasoil barges dropped relative to the front-month futures contract on ICE, according to the survey. Vitol Group sold at a discount of $3 to front-month futures, the survey showed. That compares with a $2 discount on Jan. 27.
Low-sulfur fuel oil traded from $674 to $676 a ton, while high-sulfur fuel oil traded from $664 to $670 a ton, according to the survey.
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