Europe oil/products: Brent hits fresh highs after flash crash

26 Jun 2021

Quantum Commodity Intelligence - Bulls ended the week in the ascendency, pushing Brent past $76/b, although the crude future was still on its way up at 1630 GMT in a rally that was triggered by an earlier flash crash.

Mid-afternoon, Brent suddenly lost around $0.70/b to sink to around $75/b in a move that coincided with the US Supreme Court announcing that the Environmental Protection Agency can exempt refineries from mandates to mix renewable fuels into gasoline and diesel.

RBOB gasoline prices plunged on the news that a wide pool of refineries could escape the extremely high price of RINS currently, and crude followed it down.

But the impact was brushed off and the fall triggered a rally to push Brent back to $75.89/b by 1630 UK time, up $0.51/b from the same time Thursday.

The backwardation in the futures is borne out by physical North Sea barrels, where traders were bidding at $1/b above Dated Brent curve for cargoes of Forties, up sharply over the week, sources said. 

European oil product prices gained across the board in dollar per metric tons but, with the exception of fuel oil, cracks trailed behind the day to day rally. 


Naphtha cargo prices tracked the rally in crude, gaining $4.25/mt ($0.47/b). Spot cracks end the week at -$1.34/b, up from -$2.83/b on Monday, and there were gains throughout the 12-month forward curve.

The turnaround in gasoline continued Friday, with the three main grades in AR tracking the crude rally. Spot cracks for Eurobob E5 barges in ARA end the week around $9.70/b after starting the week around $8.30/b.

The jet market was a repeat of Thursday with a bid into Le Havre at $20.50/mt above July LSG and an offer into Rotterdam at $19/mt above the future. Barges in FARAG were bid as high as $1/mt below the cargo curve. 

Diesel barges in ARA failed to trade again Friday, after several sessions of no trades this month. Diesel cargoes in the north also failed to trade, with bids at $3/mt above July into Amsterdam and offers at $4/mt amid a long market. Spot distillate cracks have edged a shade lower this week, compounding the sell-off earlier in June.

Trade thinned in fuel oil amid the rally in flat prices, with marine fuel 0.5% sulfur barges in ARA seeing just 4,000 metric tons changing hands Friday at around $519.25/mt and higher sulfur barges in ARA also trading 4,000 mt at $411/mt. High sulfur is tight in the Baltic and the Black Sea, helping cracks rally in ARA. Only two suppliers in Novorrossiysk currently offer high sulfur fuel oil, sources said.