European Diesel Rises; Vitol Sells Gasoil Cargo: Oil Products
European diesel rose to the highest level in more than three weeks as BP Plc bought on the barge market for a fourth day.
Vitol Group sold a gasoil cargo to Litasco, OAO Lukoil’s trading unit. Front-month gasoil on ICE Futures Europe exchange in London rose to more than the next month, a price structure known as backwardation, for the first time in three weeks as colder weather in Europe boosted demand.
Light Products
Naphtha’s discount to Brent shrank to $4.96 a barrel from $5.23 on Feb. 3, according to data from PVM Oil Associates Ltd., a London-based broker. The discount for June was at $6.90, the data show.
BNP Paribas SA recommended buying the European naphtha crack for June and July as refinery closures in the region crimp fuel supplies while demand rises in Asia.
“We recommend going long summer cracks,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas, said today in a report. “The positive factors driving firmer European naphtha prices recently, the prospects for tighter gasoline balances and higher Asian demand, are here to stay.”
Total SA had a technical fault on Feb. 3 with a steam cracker at its Feyzin site in France, the company said today in an e-mailed statement. The cracker produces mainly ethylene and propylene, products used to make plastics.
Gasoline (MOGEEURB) for immediate loading in Amsterdam-Rotterdam- Antwerp traded from $1,006 to $1,016 a metric ton, according to a survey of brokers and traders monitoring the Argus Bulletin Board and Platts pricing window. That compares with $997.50 to $1,008 on Feb. 3. The prices are for Eurobob grade, to which ethanol is added to make the finished motor fuel.
The motor fuel’s crack, or premium to Brent, fell to $6.19 a barrel from $6.48 on Feb. 3, PVM data show.
Middle Distillates
BP purchased four diesel barges from Royal Dutch Shell Plc at premiums of $20 and $22 a ton to February gasoil, according to the Platts survey. That’s in line with trades on Jan. 11, according to data compiled by Bloomberg.
BP bought two jet fuel barges from Deutsche Lufthansa AG and Air France-KLM at premiums of $59 a ton to March gasoil, according to the survey. That compares with Feb. 3 deals at $62 and $63 a ton to the February contract.
The 15,000 ton gasoil cargo was priced at a $13 premium to February gasoil futures for delivery to the French port of Le Havre, the survey showed.
Barges (HEATAAAA) of the heating oil traded at parity to February gasoil, the Platts survey showed. That compares with Feb. 3 deals at parity to a discount of $1.50.
Gasoil for February climbed 2.6 percent to $984.50 a ton at 5:02 p.m. London time on the ICE exchange. That contract traded at 75 cents more than March futures, pushing the market into backwardation for the first time since Jan. 16.
Temperatures in Frankfurt are forecast to fall to minus 10 degrees Celsius (14 Fahrenheit) tomorrow from minus 6 Celsius today, according to data by CustomWeather Inc. on Bloomberg. Germany is Europe largest heating oil market.
Gasoil’s crack, a measure of refining profitability, widened to $16.84 a barrel from $16.20 at 4:30 p.m. on Feb. 3, according to ICE data. Front-month Brent gained 0.8 percent to $115.47 a barrel on the ICE exchange.
Net-long managed-money bets on ICE gasoil futures and options rose to 65,438 lots last week from 67,888 a week earlier, according to ICE data.
Residues
High-sulfur fuel oil traded at $682.25 to $688 a ton, the survey of Platts showed. That’s higher than Feb. 3 trades at $659.50 to $664. The low-sulfur grade changed hands at $704 to $707 a ton compared with $687 in the previous session.
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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