ICE Gasoil at 2-Month High; Gasoline Crack Drops: Oil Products
Gasoil rose to a two-month high on the ICE Futures Europe exchange, buoyed by forecasts for colder weather in the region. The product’s crack, or premium to Brent crude, gained.
Backwardation in ICE gasoil, or the difference between the first- and second-month contracts, widened to the most since the end of October. Gasoline’s crack declined for the third session.
Gasoline barges in the Amsterdam-Rotterdam-Antwerp oil hub were bid and offered at $970 to $975 a metric ton and haven’t traded yet, according to a Bloomberg survey of traders and brokers monitoring the Argus Bulletin Board. That compares with deals from $967 to $973 yesterday.
Gasoline’s crack, a measure of refining profit, shrank 38 cents to $6.77 a barrel as of 10:36 a.m. local time, according to data from PVM Oil Associates Ltd., a broker in London. That compares with $7.14 a barrel the previous session and is the lowest in more than a week.
Naphtha’s crack, or discount to Brent crude, narrowed to $7.55 a barrel from $8.12 yesterday, PVM data showed. It has shrunk from $8.73 last week, the biggest discount in more than five months.
Gasoil for February delivery rose as much as $12 to $966.50 a ton, the highest intraday level since Oct. 30. It increased 0.8 percent to $962 a ton as of 12:53 p.m. London time on ICE.
The contract’s backwardation, or premium to March futures, grew to $8 a ton versus $7 the previous session. The market structure can signal rising near-term demand or falling supply.
The backwardation “is surging with some cold weather on both sides of the Atlantic,” Olivier Jakob, managing director of Switzerland-based researcher Petromatrix GmbH, said in a note today.
Temperatures in Frankfurt are forecast to drop to minus 6 degrees Celsius (21 Fahrenheit) on Jan. 19 from minus 1 today, according to data from CustomWeather Inc. Germany is Europe’s largest heating oil market. Temperatures will also fall below zero in London, Paris and Amsterdam this week, the data show.
Gasoil’s crack, a measure of refining profit, rose to $17.54 a barrel versus $17.10 at 4:30 p.m. yesterday. Brent declined 0.2 percent to $111.61 a barrel.
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