Europe oil/products: Strong demand for gasoline pushes up prices and cracks

Quantum Commodity Intelligence - Gasoline continued its rally, outstripping gains in crude, amid a market betting on a bullish outcome to the OPEC+ meeting when the group finally decides on its fresh production quotes.

Day three of the negotiations saw Brent rally to $76.83/b by the 1630 London time marker, up $0.75 from the same time Friday and with even wider nearby backwardation.

The spread between September and November Brent gained to $1.83/b Monday from $1.70/b before the weekend.

Distillate futures struggled to follow the rally in crude.

The Rhine, Europe's most important river for transporting energy products and commodities, could reach near flood status by 12-13 July, data available from Germany's Federal Waterways and Shipping Administration (WSV) showed Monday.

Products

Propane prices continued to surge, driven by the US benchmark Mont Belvieu after the last week's US oil inventory report showed stock at 10.3 million barrels, around 15% below the five-year average. Propane cargo prices into north Europe gained $19.75/mt, while naphtha cargo prices responded with a $12.50/mt gain. Naphtha's premium above propane narrowed to $21.75/mt Monday from $29/mt Friday.

Backwardation widened again in Eurobob gasoline barges, with trades seen at $7/mt above August paper. E10 barges traded at $8/mt above the August paper. Premium unleaded barges traded between $736 and $738/mt. MTBE barges traded at $834/mt. Eurobob barges were up $9.75/mt ($1.17/b), outstripping crude. Crack values for August paper rallied to around $11.50/b versus Brent, up $0.37/b from Friday, and up $0.70/b from last Tuesday.

A cargo of jet traded into Le Havre at $1.25/mt below CIF cargoes pricing second-half of July, to reflect the narrowing of the contango. The cargo market was also offered into Rotterdam at $20.50/mt above July, and bid into Le Havre at $22/mt above. Jet barges traded twice at $21/mt and $22/mt above July.

Diesel barges in ARA traded five lots at $1/mt under July LSG. Gasoil 50ppm barges were offered at $3.50/mt below July LSGO. Gasoil barges were bid at $11/mt below July. But distillate futures lagged behind the rally in crude slightly. 

Fuel oil prices were a tad softer despite the gains in crude, with high sulfur barges in ARA down $0.25/mt and marine fuel (0.5% sulfur) down $0.50/mt.