London — Black Sea gasoil streams for export to the Mediterranean market have become more dense over the winter as Central Asia gets first pickings of Russian gasoil with better cold properties -- and by its very nature, lower densities.
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As a consequence, the remaining gasoil streams offered to traders that operate in the Mediterranean basin have increasingly been higher-density material.
Sources say the cold weather across Central Asia has resulted in a shift for heating fuel which has driven the recent redistribution of product across end consumer markets.
With more higher density streams on offer to the Mediterranean market, blenders have needed to rethink their blending economics, and the streams used to meet certain consumer requirements.
Occasional issues have arisen when meeting tailored requirements, market sources reported.
The science of blending becomes ever more important as bespoke grades within the Mediterranean basin become increasingly prevalent.
In particular there has been an increase in demand from North Africa for 0.1% gasoil, in recent months, including the addition of Tunisia to the 0.1% sulfur-content pool.
The premium of Mediterranean 0.1% gasoil cargoes to ICE low-sulfur gasoil futures was assessed 50 cents higher on the day Thursday at $5.00/mt.
The Tunisian grade applies a cap on the density, which is lower than standard tenders issued elsewhere in the region. A maximum density of 845 kg/cu m, required by the Tunisian tenders, means blenders need to carefully consider the gasoil streams used for blending.
On trading with Tunisia, deliveries are done on an "as is" basis; meaning that no density escalator or de-escalator is applied as in other shorts in the regions.
"It is a really difficult specification that Algerian...and Tunisian specifications," the trader said.
While some results have missed the mark after attempts at blending, on the whole, there are healthy supplies of gasoil streams available for blending. The optionality from the Black Sea makes blending for North Africa a feasible proposition, a second trader said.
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