Europe's Biggest Oil Refinery Plans to Restart Key UnitBy and
Shell to try Pernis crude-unit restart, person familiar says
Diesel prices slump as traders anticipate increased supply
Royal Dutch Shell Plc will attempt on Friday to restart one of two crude units at Europe’s biggest oil refinery that were halted by a fire late last month, a person with knowledge of the matter said. European diesel prices slumped as traders anticipated more fuel supply.
Shell will try to restart a crude distillation unit at the Pernis refinery in Rotterdam, the person said, asking not to be identified because the matter isn’t public. Separately, the refinery has brought the first supporting units back online as part of a step-by-step restart of the facility, according to a company statement.
Diesel futures fell from a day-high of $487 a metric ton before the news to stand at $481.50 by 4:13 p.m. in London, ICE Futures Europe data showed.
Fuel prices in both Europe and the U.S. jumped at the end of last month when the fire forced Shell to halt most of the plant’s units. Traders directed extra cargoes from other parts of the world in anticipation of a supply shortfall in northwest Europe. The difference between diesel and crude declined immediately after the planned restart became known, a sign of a weaker market.
“I would expect distillate cracks to come off quite a bit in the next few weeks purely as a reaction to Pernis coming back,” said Steve Sawyer, a London-based analyst at FGE, talking about fuels like gasoil, diesel and jet fuel. “They may weaken for the rest of August and September, until refineries start to go into maintenance in October.”
Diesel imports from the U.S. were poised to reach a 12-week high, according to a survey of shipbrokers following the halt at Pernis. Traders were also anticipating an increase in cargoes from Asia, as well as decreased exports of gasoline to the U.S.
(Updates with company comment in second paragraph.)