ICE gasoil contracts for the rest of 2013 moved into a flatter structure, reflecting expectations that supplies will tighten because of summer demand for diesel in Europe.
The July contract traded today at a discount of about $1 a metric ton to December gasoil, compared with $6.50 a ton on June 7. Front-month July futures traded at $891.75 a ton on the ICE Futures Europe exchange at 1:44 p.m. London time, compared with this year’s closing high of $1,030.75 reached on Feb. 8.
“Diesel consumption in Europe is highly seasonal and peaks in summer,” David Wech, managing director at JBC Energy GmbH in Vienna, said today by phone. “Also, heating oil demand was pretty high over the winter months this year due to cold weather throughout most of Europe, and it makes sense to re-stock as prices are reasonably low now.”
BNP Paribas SA yesterday recommended buying the front-month ICE gasoil spread. Consumer re-stocking and “discretionary” refinery run cuts due to narrow profit margins can support higher prices, the bank said in an e-mailed report.
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