Europe oil/products: HSFO barge prices and cracks surge higher
London (Quantum Commodity Intelligence) - High sulfur fuel oil barge cracks continued to rally sharply Wednesday, extending Tuesday's gains, while gasoline cracks also jumped after a bullish US weekly oil report.
Brent continued to trend higher amid volatility.
July Brent jumped past $69/b during the morning in Europe but then dropped to a low of $68/b before the release of the Energy Infomation Administration report that sent the front-month crude future north again.
Crude and gasoline stocks drew 1.7 million barrels, and distillates drew 3 million barrels.
By 1630 Uk time, Brent was trading at $68.94/b, up 38 cts/b from the same time Tuesday.
The biggest mover was high-sulfur fuel oil barges in ARA, although the curve was rallying as early as the Singapore market close, buoyed by Fujairah stock data that showed residual stocks down 1.7 million barrels to a six week low.
Gasoline prices also saw sharp gains after the US oil statistics showed both stocks falling and implied demand rising during a rise in refinery utilization rates.
Despite the bigger distillate draw in the US, Low Sulfur Gasoil futures trailed crude, likely reflecting concerns that higher US run rates will lead to more diesel exports from the US Gulf.
Products
Naphtha benefitted from the rally in gasoline, and crack values nudged higher. The spread above propane narrowed.
Premium unleaded gasoline barges traded at $659/mt, up $8/mt ($0.96/b) to push crack values higher. The Eurobob curve also gained, but less than premium unleaded barges.
Jet fuel prices nudged slightly higher in Europe, and crack values fell again to extend a trend.
Low Sulfur Gasoil futures cracks went sideways, in contrast to the surge in the first half of May. The bullish US report amid a rise in refinery utilization rates to 87% will mean more diesel exports from the US Gulf. But high flat prices, with retail prices around pre-pandemic levels, may also hurt demand at a time when economies are still on the mend.
High sulfur fuel oil barges jumped higher amid a rally in the fuel market in general. Barge prices gained $10/mt ($1.57/b), and the cracks also surged across the curve. Fujairah oil stocks dropped to a six week low, but the correction in the curve went all the way to 2024.
