Europe Distillates-Diffs remain elevated on tight supply
LONDON, Sept 3 (Reuters) - Diesel differentials and refining margins remained at elevated levels in northwest Europe on Monday as European refineries began to head into maintenance against a backdrop of already tight supply. The European middle distillates market is seeing reduced imports from the United States and the Far East as arbitrage flows have been diverted over the past few weeks. Asian cargoes that would normally have come to Europe are being sent to the United States and South America to fill the gaps created by a fire at Chevron's Richmond, California refinery and interruptions to production caused by Hurricane Isaac. The door also is closed on U.S. exports to Europe for the same reasons. "The U.S. arbitrage is slammed shut," a middle distillates trader said. This has boosted refiners' margins and led some traders to expect a number of European refineries to delay their maintenance plans, but others are sceptical. "I don't see maintenance being delayed. Ineos is already mid-way through theirs and others are going to do it regardless of spot values," one said. GASOIL * Two gasoil barges traded in the window at a $4 a tonne discount to September ICE gasoil futures, unchanged from Friday. * Shell bought both the barges, one from Gunvor and the other from Vitol. * September ICE gasoil futures were up 0.73 percent at $1,002.25 a tonne by 1538 GMT. * The ICE gasoil crack was at $18.86 a barrel, a little weaker than Friday's $18.93 a barrel but still strong for the time of year. * The front of the ICE gasoil curve was in a backwardation of 75 cents a tonne for September/October , compared with a contango of $1.25 a tonne around the same time on Friday. DIESEL * Six barges of summer specification diesel traded at $29.50-$31 a tonne fob ARA over September ICE gasoil futures, in line with Friday's trades. * Morgan Stanley was the only buyer, with Vitol, Shell, Statoil and SK Energy amongst the sellers. * No barges of 50 ppm gasoil traded, but bids and offers came in the $17-$20 a tonne fob ARA range. * Litasco sold a cargo of French summer specification diesel to Total at a premium of $43 a tonne cif NWE to September ICE gasoil futures. * Total also bought a cargo of French summer specification diesel from Vitol at a premium of $45 a tonne cif NWE to October ICE gasoil futures. JET FUEL * No barges traded. Shell bid at a premium to September ICE gasoil futures of $94 a tonne fob ARA, up from its bid at $92 a tonne on Friday. * No cargoes traded. Bids and offers came at premiums to September ICE gasoil futures of $88-$98 a tonne fob ARA. * A trader said the September jet fuel market looked "a bit tight", although Mediterranean demand seemed softer. Jet fuel stocks remain low in northwest Europe after a lacklustre summer flying season in which airlines have been under pressure. * Cabin crews of German airline Deutsche Lufthansa were planning to strike again on Tuesday after taking action on Friday, bringing Frankfurt airport to a standstill. FUEL OIL * Barges of low-sulphur fuel oil (LSFO) with 1 percent sulphur content traded at $720 a tonne fob ARA, up from Friday's trade at $715 a tonne. * Barges of high-sulphur fuel oil (HSFO) with 3.5 percent sulphur content traded at $657-$659 a tonne fob ARA, up from $651 a tonne on Friday. * Libya is preparing to export its first post-war shipment of fuel oil from Ras Lanuf. The 45,000 tonne cargo is due to load on Sept. 5, according to a local shipping agent.