Europe oil/products: Gasoline cracks soften again, distillate cracks gain
London (Quantum Commodity Intelligence) -Distillates and fuel oil are on a rally with prices and cracks gaining again Wednesday, while gasoline cracks are softening after the first weekend of the US driving season.
Brent continued to surge, and the August contract was trading around $70.85/b by 1630 UK time, up $0.51/b from the same time Tuesday.
Low Sulfur Gasoil futures outpaced Brent, with June and July prices both up $5.25/mt ($0.70/b) at the same time.
The 50ppm and gasoil barge markets in ARA are very strong, likely reflecting demand for blending into the very low sulfur fuel oil pool.
Fuel oils in general also continued to surge higher, outstripping Brent, correcting higher from the long slide between mid-April and late May, despite bulging stocks in Fujairah.
Products
Naphtha cargo prices were up $4/mt, and cracks edged sideways for the second day in a row. July and August cracks for naphtha in Japan ticked slightly higher.
Gasoline prices edged a tad higher in general, softening crack levels for the second day in a row. Exports of gasoline from Europe to the US were down in May from April, despite the closure of the Colonial Pipeline, according to analysts. Last week, an uptick in exports was forecast, but the market has failed to spark after the first weekend of the US driving season. Premium unleaded gasoline barges were assessed at $673/mt, just under an offer at $674/mt, which knocked $0.16/b from its cracks value, which was around the same loss seen in gasoline prices in Singapore earlier in the day. Eurobob E5 barge July, August and September cracks are all below $10/b.
Nearby paper for June jet cargoes in north Europe has barely moved over the last four sessions, but there has been a rally in September and October paper. Cracks for July paper were pegged at $5.58/b Wednesday, the same as Thursday. But September cracks have risen $0.57/b to $7.30/b. The recovery has been tabled for the fourth quarter after the summer holidays.
Diesel futures outpaced Brent to lift cracks in the middle distillate complex. There was no correlation with Singapore where distillate cracks softened. Signs of the jet market recovering, and demand for 1000ppm sulfur gasoil and 50ppm sulfur gasoil, are drivers for the distillates market. Cracks between gasoil and ULSD barges have been narrowing since May 28.
High sulfur fuel oil cracks continued to rise, correcting some of the losses over the long slide from mid-April to late May, despite news of bulging Fujairah residual fuel oil stocks.
