Europe oil/products: Brent rallies at end of week, jet cracks soften
London (Quantum Commodity Intelligence) – Crude oil surged to fresh two-year highs Friday as the week-long rally propelled futures markets past a 4% rise on the week.
The August Brent contract went through the $72/b barrier for the time since 2019, hitting an intra-day peak of $72.15/b before losing ground again as gains were tempered slightly.
Brent futures for front-month August were trading at $71.55/b at 1630 London time, compared to Thursday's settle of $71.31/b and Friday 28 May's settle of $68.68/b.
At the same time Friday, July WTI was trading $69.21/b, versus Thursday's settle of $68.81/b.
A weaker than expected US payroll report, with new jobs coming in at 560,000 for May, failed to put much of a dent in demand sentiment and a falling dollar added support for crudes.
Products
Naphtha cracks improved Friday, rising around $0.2/b for the front three months as demand from the petchem industry picked up due to a slimmer premium versus propane. Naphtha stocks in ARA fell sharply, down to 217,000 mt from 323,000 mt a week earlier.
Gasoline prices in Europe rose in line with buoyant crude oil, while cracks moved sideways. Gasoline stocks in ARA were little changed, rising to 1.187 million mt, up 18,000 mt week-on-week. Trade was thin, with just 6,000 mt changing hands in Eurobob E5, and 8,000 mt in E10. Eurobob continued to trade at small discounts to July. Premium unleaded gasoline barges in AR traded once at $675/mt.
Cracks for spot-loading jet and nearby months swaps slipped Friday as the market continued to digest a tightening of international travel restrictions in Europe. The rest of the curve was flat and all outright values made gains, tracking crude. Jet stocks in ARA fell slightly on the week to June 3, dropping 38,000 mt to 1.14 million mt.
LSGO futures moved higher tracking crude gains, while diesel and gasoil cracks were flattish on the day. European road fuel demand this week continued to recover but diesel and gasoil stocks in ARA were up 4.6% over the week to June 3, rising to 2.305 million mt, up 102,000 mt week-on-week. Diesel barges in ARA failed to trade for the second day in a row. Diesel cargo differentials into ARA fell, with bids retreating $0.50/mt to $3/mt above June LSG.
Fuel oil cracks were flat down the curve Friday after making gains through the week despite stock builds in global bunkering hubs. Stocks held in independent tanks in the ARA trading hub rose to 1.374 million mt over the week to June 3, up 154,000 mt from a week earlier. Flat prices increased bolstered by crude gains.
