Europe oil/products: Diesel cracks slip, gasoline rises as Brent rises

Quantum Commodity Intelligence – European diesel and gasoil price movements lagged the $2.5/b rally in Brent crude oil futures, lowering refining margins, while spot gasoline cracks pushed back above $50/b as a series of governmental aid should spur demand higher.

July ICE low sulfur gasoil futures were up $11.25/mt by the 1630 London close to $1,302.50/mt, ending the week $8/mt higher but with cracks easing back below $65/b as Brent pushed on.

August ICE Brent futures were up $2.50/b by the same time from the prior London cash market at $113.91/b, as the benchmark contract retracted some earlier losses while a potential storm was forming in the Atlantic threatening US supply.

Gasoline outpaced crude for the second straight day as the US is mulling lifting the federal gas tax, Italy extended its fuel subsidies while the UK and Germany were planning to discuss bio mandate cuts at the G7 to lower pump prices.

All measures were seen as bullish gasoline demand after record retail prices have curtailed some demand in recent weeks, with spot cracks in Europe pushing back above $50/b for the first time in two weeks.

Products

Naphtha cargoes saw limited buying interest with the spot ticking lower to $798.25/mt, pushing the crack back down. Litasco was offering a July 4-8 naphtha cargo into ARA at even to July swaps, with RTSA’s offer for later dates at $2/mt below July. Propane also slid lower, reaching $711/mt, with the crack also weaker. Equinor was bidding a propane cargo CIF ARA for July 4-8 dates at $710/mt, while BASF was bidding CIF Flushing for a July 3-7 cargo at 88.5% the spot price of naphtha.

Eurobob gasoline swaps were up for a second straight day, following a 1.2% rise on US RBOB futures, while stocks in ARA hit a five-week low. July swaps were up $20/mt, by the London close to $1,295.25/mt, equivalent to a crack of $45.4/b. Barge differentials continued to rise, with E5’s diff over July swaps was pegged at $47.25/mt, while E10’s rose to $40/mt, up $16/mt and $10/mt on the day, respectively. Trading was slow with no barges changing hands in the E5 market while 8,000 mt was traded on E10. Premium unleaded traded twice at $1,385/mt and twice at $1,386/mt, equivalent to a crack of $55.5/b.

Prompt diesel barges were offered down at $61/mt over July LSGO, with back-end bids slipping to $50/mt, while buying interest for mid-window dates stood at $48/mt. That caused the assessed differential to fall to a near two-week low of $51.75/mt, with the diffs for 50ppm and 1,000ppm also falling. Liquidity in the diesel cargo market remained muted with just one bids reported in the north and one offer in the south. Trafigura was bidding a July 8-12 cargo into Immingham at $74/mt over July LSGO, while Totsa was offering a July 7-11 cargo into Lavera at $105/mt over the gasoil futures.

The jet fuel cargo market suffered from the same lack of market activity with just two bids reported and no offers. BP bid a July 10-16 cargo into the Ilse of Grain at $10/mt over July swaps, equivalent to $1,386/mt, while Shell was looking for a July 4-12 cargo into the Haven terminal at $5/mt over June swaps, or $1,417.50/mt. Spot cargoes in Rotterdam were assessed slightly higher on the day at $1,406.25/mt, but with its premium over LSGO shrinking to $103.75/mt. Jet barges were offered at $117/mt over July LSGO and assessed at $100.50/mt, over the distillate contract, keeping its diff to cargoes mostly flat.

Prompt fuel oil 3.5% barges traded on the bid at $558/mt, causing offers to chase lower to $559/mt across the window, while bids fell back to $556/mt by the end of the MOC. The spot was assessed $12/mt lower at $558/mt, in line with the traded level, with the crack static. Marine fuel 0.5% saw no liquidity at the end of the week with mid-window barges offered at $835/mt versus bids at $826/mt. The spot rose to $832/mt, but with the crack losing some ground.