Northwest Europe gasoline fundamentals tighten; MTBE softens on incoming supply

Market dynamics in the European gasoline market continue to point toward a tight picture, with a wide lack of tonnage availability keeping price levels supported.

Market sources have noted that supply for gasoline appears to have been fulfilled for the first half of December, further placing pressure on existing supply stocks for spot inquiries.

"The North is tight for the first half of December," a European trader said. "I don't think there will be movement, everything has been sold for the beginning of December."

Gasoline inventories in the Amsterdam-Rotterdam-Antwerp hub decreased by a mild 0.5% week over week to 975,000 metric tons Nov. 20, having continued to fall from a recent position of 1.22 million mt as of Oct. 2, according to Insights Global data.

This shortness has also been driven on the back of a continued pull of tons to West Africa, with sources noting that robust buying interest has promoted a continued healthy flow.

"There is a lot of [European] product headed to West Africa, higher demand in the Christmas period [and] people want to be covered," the same European trader said. "With [wide] gasoline-naphtha spread, people are incentivized to blend."

However, looking ahead, some blending components, namely MTBE, are likely to see some price erosion as supply levels thicken out.

The European MTBE market had seen some relief in recent days, as discussions of five ships -- three destined for ARA and two for the Mediterranean -- appeared to ease pressure in the region while overall demand remained firm ahead of the year-end.

At the same time, a trader pointed to bids emerging for forward-arrival MTBE cargoes into Europe from China, indicating early signs of appetite for replenishment. However, the arbitrage remained largely unworkable.

A buyer noted that Chinese domestic prices continued to hold firm, supported in part by tenders into Latin America that were discussed on the day, limiting the likelihood of more competitive offers into Europe.

The latest spot European MTBE prices were assessed at $801.25/mt FOB ARA Nov. 24, up by $3.75 from Nov. 21, amid a stronger upstream gasoline complex.

However, spot interest had slowed, with no activity observed during the Platts Market on Close assessment process; therefore, Platts, part of S&P Global Energy, assessed the European MTBE FOB ARA premium over the front-month Eurobob gasoline swap at $164.75/mt on Nov. 24, stable from Nov. 21.