Europe oil/ products: European distillate bull run ends amid Brent rally
London (Quantum Commodity Intelligence) - Brent bounced back Monday, shrugging off concerns about fresh Iranian barrels after doubts were raised about the immediacy of the nuclear deal, and focusing on the global economic recovery.
Goldman Sachs reiterated its bullish outlook for oil, saying that even with a potential restart of Iranian exports, the case for higher prices remains intact as vaccines roll out.
July Brent was trading at $68.18/b by 1630 UK time, up $1.49/b from the same time Friday.
The bull run in distillate cracks may have ended with Low Sulfur Gasoil futures slightly trailing behind the crude rally for the third trading day in a row.
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Naphtha cargo prices followed crude, rising $14/mt ($1.57/b) to push cracks up a marginal 8cts/b versus Brent. The spread above propane cargoes in north Europe widened $5.75/mt.
Premium unleaded gasoline, Eurobob E5 and E10 barges, were up $10.50/mt ($1.26/b) at 1630 UK time compared to Friday, and crack values softened. The nearby Eurobob swaps curve also softened relative to Brent. Cracks for July Eurobob paper have shed 42cts/b since last Wednesday, and stood at $9.87/b Monday. Exports of gasoline to the US in May have dropped compared to April, sources said.
Cracks for jet fuel cargoes in north Europe dropped 26cts/b, around the same as the drop in jet cracks in Singapore earlier, down 28 cts/b. But cracks in the nearby swaps curve were little changed. The contango between cash and paper widened, but was stable along the curve.
Diesel barges in ARA traded $1.75 and $1.50/mt below June Low Sulfur Gasoil futures, and prices rose $10.75/mt ($1.44/mt), around the same as crude. Nearby cracks values in diesel barges have marginally fallen over three trading days, ending the bull run in May that saw almost day-on-day rises previously.
High sulfur fuel oil barge cracks in ARA tumbled a dollar to -$12.43/b, more than the fall in Singapore 380cts earlier, which was down 76 cts/b. Flat prices gained $3/mt, but cracks value for spot and nearby swaps all fell heavily for the third trading day in a row. The market has fallen back into the bear trend that started in mid April, and was only briefly interrupted with a correction last week.
