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European Diesel at 3-Year Low; Gunvor Buys Naphtha

Feb. 1 (Bloomberg) -- European diesel dropped to a three-year low on the barge market. BP Plc bought its third cargo of the fuel this week.

Naphtha advanced as Gunvor Group Ltd. purchased two 12,500 metric-ton cargoes.

Royal Dutch Shell Plc will permanently halt gasoline and diesel production at its Hamburg oil refinery in Germany at the end of March as the company converts part of the site into storage facilities.

Light Products

Cargoes of naphtha traded from $979 to $981 a metric ton, according to a Bloomberg survey of traders and brokers monitoring the Platts pricing window. That’s the most since Oct. 11 and compares with $960 to $966 yesterday. Glencore International Plc, Vitol Group and Trafigura Beheer BV sold to Gunvor and Statoil ASA.

Naphtha’s crack, or discount to Brent crude, widened 5 cents to $7.36 a barrel, as of 1:46 p.m. local time, according to PVM Oil Associates Ltd., a London-based broker.

Gasoline in the Amsterdam-Rotterdam-Antwerp oil hub traded from $1,071 to $1,078 a ton, according to a survey of traders of the Argus Bulletin Board and Platts. That’s the highest since Oct. 11 and compares with deals from $1,056 to $1,062 yesterday. The product advanced 12 percent last month.

Gunvor and Chevron Corp. sold the Eurobob grade, to which ethanol is added before being sold at the pump. OAO Lukoil’s Litasco unit, Argos Groep BV, Trafigura and Royal Dutch Shell Plc purchased barges, which typically comprise 1,000 and 2,000 tons. Vitol bought and sold.

Gasoline’s crack, or premium to Brent, fell 4 cents to $13.26 a barrel, PVM data showed. That’s down from a four-month high of $13.92 on Jan. 30.

Middle Distillates

Barges of diesel traded at a premium of $5 to February gasoil on the ICE Futures Europe exchange in London, according to the Platts survey. That’s the lowest since Jan. 13, 2010 and compares with $6 and $7 yesterday. Shell, Argos Groep BV and JPMorgan Chase & Co. sold to Vitol and Morgan Stanley.

BP bought a cargo of diesel from JPMorgan at $12 a ton more than February gasoil, the Platts survey showed. That’s up from $9 yesterday. The shipment was for delivery to Amsterdam.

Jet fuel barges traded at a premium of $77 to February gasoil, compared with $78 yesterday. Shell sold to BP twice.

Heating oil barges changed hands at $3 less than February gasoil, versus discounts of $1 and $2 yesterday, the Platts survey showed. Shell, Argos and Gunvor sold to Vitol, Morgan Stanley and BP. Deals for the low-sulfur grade were completed at a premium of $2 a ton, compared with $2 and $3 yesterday.

Gasoil for February delivery rose as much as $15, or 1.5 percent, to $1,008 a ton on the ICE Futures Europe exchange in London. That’s the most since Oct. 12 and extends a 7.1 percent advance last month. The contract was at $1,005.50 a ton at 5:16 p.m. London time.

The contract’s premium, or backwardation, to March futures narrowed 25 cents to $10 a ton. The spread was at $10.25 yesterday and on Jan. 30, which was the widest gap since Oct. 30. The market structure may signal falling near-term supply or rising demand.

Gasoil’s crack was little changed at $16.78 as of 4:30 p.m. yesterday. Brent rose $1.26 to $116.81 a barrel.

Residues

High-sulfur fuel oil changed hands from $636 to $637.50 a ton, the survey of Platts showed. That compares with $629 to $630 in the previous session. The low-sulfur grade traded at $668 a ton, versus $660 to $662 yesterday.

Refineries

Shell will decommission one of the crude oil distillation units and the catalytic cracker at its Hamburg refinery, Cornelia Wolber, a Shell spokeswoman, said today in an e-mail. Catalytic crackers are used in gasoline production.

A fire at OAO Lukoil’s 48,000 barrel-a-day Ploiesti plant in Romania occurred today in a delayed coker unit which was scheduled to undergo maintenance in a few days, according to a company spokesman who asked not to be identified, citing company policy. The fire has been extinguished and no other operations were affected, he said.

Hellenic Petroleum SA, Greece’s largest refiner, said a mechanical failure affected its Okta refinery in Macedonia two days ago, injuring one employee. The company declined to say whether output from the plant was affected by what it described in an e-mailed statement as a mechanical failure of a valve during routine maintenance.

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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