European oil prices rally, led by premium unleaded gasoline

London (Quantum Commodity Intelligence) - The European oil complex surged Wednesday, led by premium unleaded gasoline and distillates, amid bullish forecasts and data, and a drop in the dollar index ahead of the Federal Reserve's Open Market Committee (FOMC) meeting decision.

July Brent was trading around $67.10.b by 16.30 UK time, up $1.72/b, from the same time Tuesday.

But the crude future was outstripped by moves in gasoline and distillates.

On Tuesday, OPEC+ Joint Ministerial Monitoring Committee (JMMC) rubber stamped the proposed output increases from May, despite the spike of coronavirus cases sweeping through India.

Goldman Sachs issued a bullish report for commodities Wednesday, expecting Brent prices to reach $80/b during the next six months.

Later, the US Energy Information Administration weekly oil statistics showed US distillate stocks fell by 3.3 million barrels last week to 139 million barrels, outstripping analyst estimates of a 600,000 barrel draw.

Commercial stocks of crude rose 90,000 barrels to 493.1 million barrels in the week ending 23 April, while gasoline stocks rose by 100,000 barrels to 235.1 million barrels, the agency said.

That compares with expectations of a 700,000-barrel build for crude and a 500,000 barrel build for gasoline.

Products

Naphtha prices followed the rally in gasoline, with cargo prices up $17.50/mt ($1.95/b), and widening its spread above propane cargo prices, which gained only $10.50/m, to $101/mt. Brokers pegged the May propane/naphtha paper at -$100/mt.

Gasoline led the rally in the oil complex with premium unleaded barges in ARA, trading at $647.75/mt, pushing prices up $17.25/mt ($2.07/b) from Tuesday. Eurobob E5 and E10 prices trailed the gains in premium unleaded, partly on the back of trades earlier in the day, but the May paper for Eurobob E5 was trading at $643.25/mt by 16.30 UK time, up $13.50/mt from Tuesday.

The jet market saw contradictory bids and offers, reflecting a tightness into Le Havre currently compared to Rotterdam. While Le Havre was bid at $25/mt above May Low Sulfur Gasoil, Rotterdam was offered at $24.50/mt above the front month distillate future. There was also a trade into Le Havre, pricing $1.25/mt above May cargo prices at the same time as there was an offer at flat to Cif cargo prices over the second half of May. The market was assessed at a premium of $24.75/mt to the distillate future.

Low Sulfur Gasoil futures outstripped crude, with the calendarized monthly value for May was up $13.75/mt ($1.85//b). But there were further gains for diesel barges in ARA, which traded at a very narrow discounts to front month Low Sulfur Gasoil futures, pushing prices up $14.50/mt ($1.94/b).

Fuel oil was the laggard of the market today, with high sulfur fuel oil barges in ARA trading at $370/mt, up $8.75/mt ($1.38/b) higher, while marine fuel (0.5% sulfur) traded $100/mt higher at $470/mt.