Europe oil/products: Oil products straining to keep up with Brent rally

London (Quantum Commodity Intelligence) - Brent firmed again Tuesday as doubts emerged over the Iranian nuclear deal, but the product market showed the strain of the recent crude rally amid the persistence of Covid-19 in Asia, with gasoline, distillate and jet cracks softening.

Cracks for gasoline have been softening since peaking in early May amid a series of stock builds in the US and lacklustre implied demand figures.

But the jet and diesel softness has crept in last week, stalling a long recovery in the middle distillate market, despite refiners cutting back production last month.

Euroilstock data showed European refinery output fell 4.1% in April from March, sources said.

Production fell in gasoline, naphtha, middle distillates, and fuel oil.

Products

Naphtha cargoes were one of the few products to keep pave with Brent. Propane saw healthier gains, and the spread below naphtha narrowed to $96.25/mt.

Premium unleaded gasoline prices in AR were unchanged, with an offer at $652/mt, shrugging off the strength in crude. Cracks for July Eurobob paper have dropped $60 cts/b since last Wednesday.

Cracks for jet fuel cargoes have been falling since last Thursday, and continued today with the June paper for cargo in north Europe fell 34 cts/b Tuesday. The market is taking its cue from Singapore where jet fuel cracks versus Brent also turned south on Thursday.

Rainfall in north Europe has swelled the Rhine, but levels will fall back over the next few days. Diesel barges traded $1.50/mt below June Low Sulfur gasoil futures in ARA, but cracks versus Brent slipped lower again.

High sulfur fuel oil prices bounced back from Monday's slump, and the last four trading days have been highly volatile. The forward curve in HSFO gained Tuesday to partly reverse three days of declines.