Europe oil/products: Propane and marine fuel rise against the grain of the oil complex

Quantum Commodity Intelligence - Propane cargo prices and fuel oil barge prices rose in north Europe Thursday despite a weaker oil complex, with crude slightly softer after the prior day rally.

August Brent strengthened in the morning, dipped early in the afternoon, and then recovered to trade $75.38/b at 1630 Uk time, posting a modest $0.33/b drop by 1630 UK time.

November Brent was only down $0.23/b at the same time, and the backwardation between August and November narrowed $0.10/b to $2.24/b.

Nearby distillate futures in Europe were also softer by the settle, slightly outpacing crude lower.

Products

But the surprise of the market was propane where cargo prices gained $7.75/mt, lifted by the nearby curve closing the gap on naphtha. The July spread between propane and naphtha in Europe narrowed to -$57/mt Thursday from -$64/mt Wednesday, while the August paper narrowed to -$53/mt Thursday from -$59.5/mt Wednesday. Naphtha cargo prices also nudged up $1/mt, increasing the backwardation to July paper, which softened around $0.75/mt to $647.75/mt at 1630 UK time.

Eurobob E5 gasoline barges continued to trade flat to July paper during the day, but the E10 barges dropped to $1 above the paper. Later, E5 traded at $715/mt and $714/mt, far higher than the swap value, while at the same time premium unleaded barges in ARA traded several times at $713 and $714/mt. July Euorbob paper cracks continued to climb higher, gaining another $0.25/b Thursday to $10.39/b to extend a turnaround that started on June 15 when the crack was below $9/b.

There was a cross over in jet cargoes, with a bid into Le Havre at $20.50/mt above July LSGO and an offer into Rotterdam at $19/mt above July LSGO. There were also barge trades at $19.50/mt above July LSG. Cracks for jet cargo paper softened across the 12-month curve for the second day. Even cracks for second-quarter 2022 paper, which had been gaining last week, have edged lower.

Diesel barges traded five lots at $1.75/mt below July LS Gasoil, loading front, middle and back end trading window dates. The diesel cargo in the north saw a repeat of Wednesday bids and offers, with the best bid into Amsterdam at $3/mt above July LSG and the best offer at $3.50/mt above the front-month distillate future. The Mediterranean also saw a flurry of bids, with an EFP bid at $3.75/mt above July futures. In the gasoil cargo market, there was a bid for 18,000 mt into Amsterdam at $7/mt below August LSG. The 50ppm gasoil barge market traded at $3.50/mt below July LSG. Cracks for spot and the curve in diesel barges softened to extend the trend. Ship tracking company Vortexa warned there was an armada of diesel cargoes on the water: "We could even be in for an all-time high above 8mn b/d in June (excluding intra-country flows), and are set to see the second month in a row above the respective 2019 level."

Both high sulfur and marine fuel (0.5% sulfur) barges were assessed $7/mt higher Thursday, in line with stronger values in the nearby curve.