Europe oil/products: Product cracks fall as Brent pushes $117/b
Quantum Commodity Intelligence - European product refiner margins were down across the board by the European close on Wednesday, with market interest for diesel and gasoil muted while Brent futures rose as the G7 announced more sanctions.
ICE July low sulfur gasoil futures were down for a second consecutive session, falling $43/mt by the 1630 close to a three-week close at $1,219.25/mt.
Buying appetite for diesel in Europe remained muted, despite sliding stocks, with no bids or offers reported in the northwest European diesel cargo window for a second day and no deals reported.
That left cargo cracks below $63/b for the first since early June, while gasoline barge cracks hit $45/b.
Products
The northwest European naphtha cargo market took back two days of losses, gaining $7.75/mt to $798.75/mt, following swaps higher but lacking any market interest. The spot was pegged at a $7/mt discount to July swaps, static on the day. Propane cargoes kept their premium to July swaps static at $6/mt, moving the spot higher to $725/mt, and narrowing the discount to naphtha to a one-week low.
The backwardation in the European gasoline market cooled from a three-week high as July swaps were marginally lower to $1,307.75/mt by the close, while the rest of the forward curve rallied, mirroring the moves on Brent. Yet that came despite a steepening of the backwardated RBOB curve as July futures rallied 2.1% while December was up by just 2%. European gasoline cracks were lower across the forward curve, shedding two days of gains with the spot crack back down to $48.1/b. Liquidity picked up with 12,000 mt trading on E5 and 7,000 mt trading on E10. Barge differential continued to slide, with E5 ending the day $3/mt lower at $39/mt over July swaps, while E10's diff stood at $20/mt, down from $55/mt a day earlier. MTBE was offered down sharply at $1,894/mt, pushing the factor to E5 back down to 1.40.
Diesel barges were offered at the back of the window at $44/mt over July LSGO futures but continued to lack any buying interest, causing the assessed diff over gasoil futures to fall to a three-week low. There were no indications in the northwest European diesel cargo market for a second straight session, with the assessed diff over LSGO sliding to $89.50/mt, while the crack fell to $63/b. In the Mediterranean, Gunvor was looking for a July 15-22 cargo Mersin which it bid at $70/mt over August LSGO, or $21.50/mt over the underlying paper, equivalent to $1,270/mt. Totsa was offering a July 8-12 cargo into Lavera at $99/mt over July LSGO, with the assessed diff sliding to $85.50/mt.
The premium of jet fuel cargoes landed in Europe over the gasoil futures fell for a fourth straight session to $87/mt amid rising arrivals and stagnating growth in Europe's travel sector due to labour shortages. Unipec was offering a July 8-12 cargo into Rotterdam at $119/mt over July LSGO futures, or $20/mt over July 16-31 pricing, equivalents to $1,314.50/mt. A July 8-23 cargo was offered at $20/mt over July 20-31, or $1,312.75/mt. BP was bidding a July 10-16 cargo into the Isle of Grain at $12/mt over July swaps, or $1,312.50/mt, while a cargo with the same dates and underlying pricing into Le Havre was bid at $6/mt over. Shell bid Haven at $6/mt over July swaps for slightly later dates. A back-end jet fuel barge traded on the offer at $96/mt, while the front-end barges were bid at -$5/mt versus the swaps.
The Hi5 spread in ARA rose for a second straight session to a three-week high of $311.25/mt due to a continued lack of distillate blendstock in the hub. Fuel oil 3.5% barges traded on the bid at $558/mt, up $6/mt on the day, and with an outstanding offer at $559/mt. Marine fuel 0.5% barges were bid to $867/mt versus offers at $874.50/mt and the spot assessed $18.25/mt higher at $869.25/mt.