Europe Distillates-Diffs remain elevated on tight supply

Mon Sep 3, 2012 12:39pm EDT

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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.
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