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European Jet Fuel Drops; Gasoline Crack Advances: Oil Products

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Dec. 20 (Bloomberg) -- European jet fuel premiums dropped as BP Plc sold on the barge market for a second day. Vitol Group bought two naphtha cargoes.

Gasoil gained on the ICE Futures Europe Exchange, moving into backwardation for the first time in more than five weeks. Gasoline’s crack, or premium to Brent crude, advanced to a two-month high.

Light Products

Naphtha traded from $952 to $958 a metric ton, according to a Bloomberg survey of traders and brokers monitoring the Platts pricing window. Vitol, Dow Chemical Co. and Cargill Inc. bought shipments from Royal Dutch Shell Plc, Trafigura Beheer BV and Total SA. That compares with deals at $959 to $961 yesterday.

Naphtha’s crack, or discount to Brent, narrowed to $3.05 a barrel, according to data from PVM Oil Associates Ltd., a crude and products broker. It was $3.28 in the previous session.

Gasoline in the Amsterdam-Rotterdam-Antwerp area traded from $955 to $960 a ton, according to a Bloomberg survey monitoring the Argus Bulletin Board. That compares with deals at $950 and $951 yesterday.

Gunvor Group Ltd., Trafigura Beheer BV and Chevron Corp. sold the Eurobob grade, to which ethanol is added to make finished fuel. Shell, Vitol and Cargill bought shipments of 1,000 and 2,000 tons.

The fuel’s crack, or premium to Brent crude, rose to $5.47 a barrel as of 14:05 p.m. London time, from $5 yesterday, PVM data showed. It was the highest since Oct. 17.

Gasoline demand in the U.K. fell 5.6 percent to 1.1 million tons in October from a year earlier, data from the Department of Energy and Climate Change showed.

Middle Distillates

Diesel barges traded at $16.50 and $17 more than January gasoil on ICE, the Platts survey showed. That’s little changed from a $17 premium yesterday. Statoil ASA and OAO Lukoil’s Litasco unit sold to Vitol and Shell.

Morgan Stanley bought three jet fuel barges from BP at plus $84 and $85 a ton, the survey showed. Premiums were at $85 and $86 yesterday.

Jet fuel inventories held in independent storage dropped to the lowest in seven years in Europe’s Amsterdam-Rotterdam-Antwerp oil-trading hub, according to PJK International BV. Stockpiles fell to 148,000 tons in the week to today, according to PJK, a researcher based in the Netherlands.

Gasoil for January delivery rose as much as $8, or 0.9 percent, to $945 a ton, the highest since Dec. 4, and was at $944 as of 4:49 p.m. local time. The February contract was at a 50 cent discount to the front month, moving the market into backwardation, a structure that signals near-term scarcity of supply or rising demand.

The market had traded in contango, where near-term supplies being cheaper than later-dated deliveries, for most of the past 28 days.

Gasoil’s crack increased to $16.44 a barrel versus $15.92 as of 4:30 p.m. yesterday. Brent fell 32 cents to $110.04 a barrel on the ICE exchange.

Diesel consumption in the U.K. rose 0.3 percent in October to 1.8 million tons from the same month last year, DECC said.

Residues

High-sulfur fuel oil changed hands from $574 to $581 a ton, the survey of Platts showed. That compares with $575.75 to $583 a ton yesterday. The low-sulfur grade traded at $606, versus $614 yesterday.

Rhine River

The Rhine River section near Karlsruhe, where the 310,000 barrel-a-day Miro refinery is located, opened after a one-day closure, Thomas May, an official from the Wasserschutzpolizei, said by phone. Barge traffic is subject to speed restrictions in that area because of high water levels, May said.

The barge clearance level on the Europe’s busiest inland waterway at Rheinfelden close to the Swiss border fell to 6.94 meters today, a second straight drop, data compiled by Bloomberg show.

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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