Europe oil/products: Brent gains as market eyes more stock draws
Quantum Commodity Intelligence - Brent recovered Tuesday from an afternoon low triggered by a report showing US inflation jumped 5.4% in June, as the market eyed further stock crude stocks draws in the US.
Earlier, the International Energy Agency warned again of the looming supply crunch after seeing global oil demand gaining 3.2 million bpd in June.
Analysts were divided over whether gasoline and distillate stocks drew last week, but there was uniformity in the opinion that crude stocks will have drawn down again for the eighth week running when the US Energy Information Administration releases its weekly statistics on Wednesday.
Backwardation in the naphtha market remained very wide, with August and September swaps for northwest Europe cargoes narrowing only $0.25/mt to $10.50/mt. Spot cargoes were assessed $13.25/mt above the August paper. The propane cargo market is shallow in comparison, with just $1.50/mt of backwardation between August and September paper as last week's scare over low US propane stock builds ahead of the winter faded.
Backwardation for gasoline barges widened, with E5 trading $7/mt above August paper, up from $6/mt Monday. Some 8,000 mt changed hands. E10 backwardation gained to $8/mt and $9/mt, although the latter only for one lot, above August paper, with 8,000 mt also trading. Premium unleaded barges changed hands at $733/mt. The prompt spread between Eurobob and RBOB gasoline in the US was steady. Previously, the spread has widened before the release of larger than expected stock draw.
Jet cargo differentials jumped higher with a bid into Le Havre at August LSG plus $25/mt, while the offer into Rotterdam retreated to August LSG plus $25.50/mt. There was also a trade on a floating price basis into Rotterdam at -$1.25/mt, pricing end July. Jet barges traded at August LSG plus $24/mt and $25/mt. Nearby cracks for jet have climbed over the last five days.
Four prompt loading diesel barges traded, one at -$2.75/mt and the other three at -$2.50/mt versus August LSG. Later loading diesel barges were also offered at -$2.25/mt. Gasoil 50ppm barge differentials also softened with an offer at -$5/mt versus August LSG. In diesel cargoes, there was a bid into Amsterdam at $2.50/mt and an offer at $3.75/mt above August LSG, but there was also a trade into Le Havre at $4.25/mt above August LSG. In the Mediterranean, diesel cargoes were bid on a floating basis at -1.75/mt and offered at $0.50/mt. Low Sulfur Gasoil futures slightly outstripped the gains in Brent.
Both high sulfur and marine 0.5% fuel oil barges edged up almost together amid the crude rally, and the spread between them remained wide at $125.75/mt.