Euro oil/products: Gasoil backwardation eases to 2.5-mth low
Quantum Commodity Intelligence - Backwardation in the European gasoil market eased to a 2.5-month low by the Tuesday close as supply constraints continued to wane, while Brent futures held static at a two-month high.
The November low sulfur gasoil futures fell $30.25/mt by the 1630 close to a one-week low of $1,067.75/mt ahead of its expiry on Friday as French refineries ramp up following month-long strikes and after a rise in imports.
The backwardation to the December contract slumped to $19/mt, its lowest between the front two contracts since late August and near levels last seen before the outbreak of the Ukraine-Russia war.
At the same time, January Brent crude oil futures were static day-on-day at the 1630 close at $99.35/b as the bearish effect of a spike in Covid cases in China was offset but a rebound in the dollar.
November ICE gasoil cracks slumped $4/b to a 1.5-month low of $45.6/b by the close, while cash markets saw smaller losses as cash differential to the futures in diesel and gasoil markets recovered.
Differentials in the gasoline barge market also rebounded, limiting the losses there.
Products
Gasoline steadied after Monday's sell-off, with E5 oxy barges rebounding against swaps. Totsa sold 8kt of oxy E5 gasoline to Trafigura and Shell at $125/mt above December Eurobob swaps, up $10/mt on the day, assessed at a volume-weighted average $962/mt. E10 non-oxy gasoline moved $10/mt the other way against swaps, as Sahara and BP sold 8kt to Varo and Totsa at a $140/mt premium, assessed at $1,001/mt. Petroineos was active again on premium-unleaded barges, this time selling a single barge to Hartree on 11-15 November dates. And Shell sold a finished-grade non-oxy cargo to Prax at $1,034/mt CIF Thames on 18-22 November dates.
No naphtha indications were reported on Tuesday and cargoes were marked down $7.75/mt on the day in line with the paper at $689.50/mt, with cracks $0.80/b lower at $21.43/b.
Diesel losses continued on Tuesday, as sharp offers mainly from Vitol pulled cracks and physical diffs lower. Vitol offered ULSD cargoes into Le Havre at $30/mt above swaps and into Lavera at a $39/mt premium, and were marked down $16.25/mt and $2/mt, respectively, against the paper. Gunvor joined Vitol in offering ULSD barges across the curve, from $7/mt above November ICE gasoil at the front-end to $4/mt at the back-end, and tracked the paper lower at a $1/mt discount to futures. Vitol also bid $6/mt below November futures for 50ppm barges on prompt loading dates, and were marked just below Vitol's offer at -$1/mt in the midwindow. And Repsol offered 0.1% gasoil into le Havre at $3/mt over swaps, against Vitol's bid into La Pallice at $20/mt below December futures.
Jet closed further ground to diesel, as prices firmed against swaps and futures on improved demand. Glencore bid up to $31/mt over the paper for cargoes into Rotterdam, which pushed value up around $4/mt against swaps and $19.75/mt higher versus futures, assessed at $1,133/mt. Glencore also sold a jet barge to Unipec at $24/mt above swaps on front-end loading dates, and were assessed in line at $1,126.50/mt, flat against swaps and up $14.25/mt versus futures.
Marine fuel 0.5% activity picked up further on Tuesday, with 10 barges booked by the end of the day in Europe. Deals were booked along the curve, with Glencore, Mercuria, OEI, and Total buyers and BP, Mercuria and Shell on the sell-side. The front end of the market traded on offers at $630/mt FOB ARA, with the mid-window booked on an offer at $627-$628/mt, and the back end on bids at $624-$627/mt and on an offer at $624/mt. Averaged out, those deals left Quantum's barge assessment down $10.50/mt at $627/mt.
In the 3.5% fuel oil barge trade, activity showed tentative signs of recovery as five deals were booked by the end of the day. All the deals were for loading at the front end of the window, with Total buyer from Aramco, Shell and Vitol at $404.25-$406/mt FOB ARA. With that, Quantum lowered its cash assessment $8.75/mt to $406/mt. Cargo activity remained muted, with no fresh indications heard in the market by time of press.