Europe oil/products: Brent drops lower after US gasoline stocks and refinery runs rise

Quantum Commodity Intelligence - Brent fell after the weekly US oil statistics posted another build in US gasoline stocks, although there was also a draw in distillate stocks. 

By 1630 UK time, September Brent was trading at $74.42/b, down $0.19/b from the same time Tuesday. 

Gasoline stocks increased 1.5 million barrels over the week to June 25, and although they dropped 2.9 million barrels a week earlier, total stocks of 241.6 million barrels last Friday were 9.1 million barrels higher than May 21.

Gasoline stocks were last higher the week of June 11 when they reached 243 million barrels, but before that stocks were last higher the week of February 26.

US distillate stocks dropped 900,000 barrels over the week to June 25, but at 137.1 million barrels were up 8 million barrels since May 21.

US refinery rates increased another 0.5 percentage points.

Products

Naphtha prices were assessed much softer amid a slight softening of the backwardation between July and August paper, but propane prices rallied again. The July spread between naphtha and propane cargoes in the north narrowed to -$43/mt from -$56/mt. Saudi Arabia has hiked its OSP for LPG in July to $620/mt, up $90/mt from June.

Gasoline Eurobob E5 trades traded between flat and $4/mt above July paper in the morning, before the EIA statistics. Premium unleaded barges traded at $714/mt around the close. Gasoline prices dropped slightly amid the fall in crude.

A cargo of jet traded into Le Havre at $20/mt above July LSG, and another traded on a floating price basis into Rotterdam at $2/mt below Cif cargo quotes. E10 barges only traded at $4/mt above paper. Jet barges were offered at $21/mt above July, and traded at $0.50/mt above fob high barges.

Diesel cargoes traded twice into Amsterdam at $4.50/mt above July LSG, higher than trades of $4/mt and $4.25/mt on Tuesday. Diesel barges traded only once, but also at a higher differential of $1/mt below July LSG. The market seems to be reacting to the lower Primorsk export program in July of 1.1 million mt, down from 1.25 million mt in June, and also the fourth month of falls. In the Mediterranean, there was a bid into Koper at July LSG Plus $4/mt. "Diesel arrivals from Asia and the Middle East are expected to be slightly lower this month," said one broker. Overall, diesel prices slightly outstripped the falls in Brent amid further increases in US refinery utilization rates.

Marine fuel 0.5% sulfur traded at $514/mt, but only for 4,000mt, while high sulfur barges in ARA traded 6,000 mt between $403.25 and $403.50/mt.