LONDON, July 6 (Reuters) - European gasoline prices fell
below $600 a tonne on Monday, pressured by lower exports to the
United States and the Middle East and a drop in crude futures.
Prices were down about 2.5 percent to around $585 a tonne,
with news Saudia Arabia's imports, most of which come from
Europe, are expected to fall by 40 percent in July.
Brokers said lower demand out of the Middle East was adding
to concerns created by lacklustre domestic consumption and
rising inventories of the motor fuel in the United States.
"Gasoline needs a pick-up from the U.S. inventory numbers
later this week, otherwise we're going to see European prices
continue to fall," one broker said.
On the swaps market, European gasoline barges flipped back
into contango -- with July prices trading at a discount to
August, suggesting the balance in Europe between supply and
demand is not particulary tight.
PRICES
* Premium unleaded 10ppm gasoline barges traded at $582-$586
a tonne fob ARA, the lowest level since mid-May. Prices closed
around $600 a tonne on Friday.
* The dealing was relatively thin, with about 7,000 tonnes
changing hands throughout the day. Vitol was the most active
buyer, with Gunvor the main seller.
* The drop in the Eurograde gasoline barge prices was not as
severe as in crude oil, pushing its crack to dated Brent BFO-
up slightly to $6.25 a barrel from $6.10 on Friday. However, the
crack is only a third of its level from mid-June.
* Brent crude futures LCOc1 were trading down $1.23 at
$64.38 a barrel by 1636 GMT. [O/R]
* U.S. RBOB gasoline futures RBc1 were trading down more
than 4 cents at $1.7405 a gallon.
SWAPS
* Gasoline swaps also fell sharply. The balance of July was
$594 a tonne, but the spread between July and August turned
positive with the later month trading at $596.50 a tonne.
* The rest of the curve remains in backwardation with
September trading at $592.50 and October at $574 a tonne.
* Cracks rose to $6.15 a barrel from $5.25.
INVENTORIES
* The increase in U.S. gasoline inventories last week was
likely to limit arbitrage export opportunities from Europe,
traders said. [EIA/S]
* Data released on Tuesday and Wednesday on the state of
U.S. fuel inventories will be watched closely to see if stocks
of gasoline are continuing their upward trend. [ID:nN06444486]
EXPORTS/IMPORTS
* Brokers put the potential profits for European traders to
export to the United States at around $5.50 a tonne for July.
* Saudi Arabia is expected to import 40 percent less
gasoline in July than in recent months as more domestic refining
capacity comes online. [ID:nSP192894]
NAPHTHA
* One naphtha deal was done in the afternoon trading window,
with Shell buying a cargo from Gunvor at $570 a tonne for
delivery between July 15-19.
* Brokers said demand for naphtha was picking up, supported
by arbitrage opportunities to the U.S. and restocking by
petrochemical firms.
* The spread between naphtha and gasoline in Europe is at
its lowest level since March.
(Reporting by David Sheppard; Editing by James Jukwey)
