Europe oil/products: Brent eases, and nearby gasoline cracks soften
London (Quantum Commodity Intelligence) - Brent eased slightly Monday amid chatter about talks with Iran on a nuclear deal restarting on Thursday and news of Chinese crude imports falling in May from April, but there was also signs of an increasingly long crude market.
Brent futures for front-month August were trading at $71.32/barrel (1430 GMT), compared to Friday's settle of $71.89/b and down 0.8%.
On the cash side there were nine CIF cargo offers of Brent and Forties cargoes in the afternoon trading window, pushing the Dated Brent assessment lower, sources said.
Five tankers carrying about six million barrels of North Sea crude have been floating offshore for two to three weeks, Bloomberg reported earlier.
Most of the cargoes hold Forties crude, which is usually shipped off to Asia.
After maintenance in June, production of Forties bounces back in July.
Backwardation between August and September Brent narrowed $0.05 to $0.37/b by 16.30 UK time Monday compared to $0.41/b Friday.
Products
Naphtha cargo prices were assessed $0.75/b lower Monday, slipping slightly lower on softer crude. However, this left cracks up on the day amid market chat of a shift towards naphtha in petchem crackers due to better yields of certain products with increasing margins.
Trade picked up in gasoline barges, with seven Eurobob E5 lots changing hands during the day. E10 trade remains thin with two barges, or 4,000/mt, trading. The nearby curve is also widening, with E5 barges trading at discounts of -$4 versus July paper, up from -$2 and -$3 on Friday. Four premium unleaded barges traded, two at $669/mt and two at $670/mt. Gasoline cracks softened again along the nearby Eurobob curve.
At least three cargoes of jet that were signalling Rotterdam have diverted to the US: BW Links, Gulf Coral, and Sur, sources said. The Sur, originally from Singapore, is carrying 130,000 mt. The number of jet flights in 41 countries around Europe picked up 12.5% week-on-week, according to Eurocontrol, but still remained more than half levels seen in 2019, while the US recovery is far more advanced.
Diesel cargo differentials are softening. In the north, a cargo was offered into Amsterdam at $3 above June LSG. In the Mediterranean, a cargo was offered into Lavera at a premium of $2.75/mt above July. Diesel barges in ARA were bid at -$2 and offered at flat to June. The 50ppm barge market remains very strong, with two lots changing hands at -$2.
Trade volume was average in fuel oil, with 12,000 mt of high sulfur barges changing hands between $380.50 and $381/mt. Product with 0.5% sulfur traded 16,000 mt between $495.50 and $495.75/mt.
