Europe fuel oil margins march higher, jet collapses and gasoline ends losing streak

London (Quantum Commodity Intelligence) – Refining margins for fuel oil in Europe lost ground Friday, but still finished 4-8% higher week-on-week along the curve, amid falling stocks in the Middle East supply hub and delays to Iran talks pushing out the expected arrival of heavy crude barrels.

Cracks in the nearby months posted smaller gains over the week despite the contango structure narrowing, with June/July high-sulfur fuel oil FOB ARA barge swaps indicating 3.8% and 4.8% gains on the week to -$11.04/b and -$10.65/b, respectively, Quantum data showed.

The backwardated structure on Brent crude strengthened though with smaller gains seen for further-out months, while the whole HSFO flat price curve was dragged higher by moves at the front, leaving cracks for 6-12 months out up on average 7.6%.

Elsewhere, jet fuel margins were pushed the opposite way, with nearby cracks faltering as sentiment on an uptick in air passenger numbers dwindled and crude prices rocketed higher, while cracks 6 to 12 months out were relatively stable.

Cracks for jet fuel CIF NWE June and July swaps were 8.4% and 5.8% down on the week at $4.83/b and $5.63/b.

Gasoline cracks also finished mostly unchanged on the week after putting paid to a 4-day losing streak and starting a 3-day roll higher on Wednesday when EIA data showed a greater-than-expected stock draw and more cargoes began to be booked into the US.

June and July swap cracks for Eurobob E5 gasoline FOB AR were $10.15/b and $10/b at Friday's 16.30 London close, up $0.1/b and $0.19/b respectively, but after having hit intra-week lows of $9.40/b and $9.69/mt on Tuesday.