Europe oil/products: Gasoline cracks rally
Quantum Commodity Intelligence - Gasoline prices and cracks surged higher on another volatile day in the crude market with Brent recovered from a morning slump to edge higher by late afternoon.
The soon-to-expire August Brent was trading at $75.24/b by 1630 UK time, up 9 cts/b from Monday, while September Brent was at $74.61/b, up $0.21/b.
September Brent traded in a range of more than $2/b over the day after earlier posting a low of $73.34/b to reflect market jitters over the direction of crude, with the resurgence of Covid in Asia and the OPEC+ meeting starting in July.
Goldman Sachs reiterated its bullish stance on oil, saying a 1 million bpd hike in OPEC+ output in August would only cause a $2-3/b drop in its forecast of $80/b in Brent over the summer.
Most commentators expect OPEC+ will add an extra 500,000 bpd to the market.
Products
Naphtha cargo process rallied amid widening backwardation in the nearby curve. The spread between July and August paper gained a $1/mt to $10.50/mt.
Gasoline prices surged higher. Eurobob E5 barges started the day trading $2/mt above July paper, and ended $4/mt higher. Eurobob E10 traded at $5/mt above July paper. Premium unleaded gasoline barges traded eight lots at $715/mt, up $4/mt ($0.48/b) from Monday.
European jet continues to feel the drag of the impact of Covid in Asia and the softness in distillates. The north European spot market is maintaining a spread of around $20/mt above Low Sulfur Gasoil futures, but cracks in the forward curve have also softened for several days in a row.
Diesel cargo differentials gained, with two trades into Amsterdam at July plus $4 and $4.25/mt. Diesel barge trade into ARA remained thin, but the market traded three times, twice at $1.75/mt below July LSG and once at $2/mt below July LSG.
Fuel oil trade was brisk. Some 20,000 mt changed hands in marine fuel 0.5% sulfur around $516.50/mt, and 6,000 mt changed hands in high sulfur barges around $404.50/mt.
