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Switzerland releases additional diesel, gasoline reserves on low Rhine water levels

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Switzerland releases additional diesel, gasoline reserves on low Rhine water levels

London — The Swiss Federal Office for National Economic Supplies (BWL) Thursday granted oil product importers temporary permission to take delivery of an additional 46,000 mt of ultra-low sulfur diesel and 12,000 mt of gasoline from mandatory reserve stocks until the end of November due to persistently low water levels on the Rhine, a spokesman told S&P Global Platts.

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The decision follows the release of 25,000 mt of ULSD on October 22, as well as additional releases of 63,000 mt of ULSD and 26,000 mt of gasoline on October 26.

Switzerland has released a total of 135,000 mt of ULSD and 38,000 mt of gasoline from its strategic reserves, representing approximately 13% of the country's total diesel and 4.4% of total gasoline reserves.

Low Rhine water levels have presented significant logistical problems for end-users and importers of oil products. WSV, the German waterways authority, pegged water levels at key chokepoint Kaub at around 47 centimeters Thursday morning and forecast lows of 35 cm Monday.

Due to the low water levels, only a few double-hull barges are able to navigate the upper Rhine to supply southern Germany and Switzerland. As a result, Germany too released 180,000 mt of ULSD, 84,000 mt of gasoline, and 67,000 mt of jet fuel stocks on October 24 because of an acute shortage of oil products in the south of the country.

One trader active in the region said Wednesday that "barges can only sporadically navigate the upper Rhine, it's never enough to keep the system running."

Barge restrictions have also meant record-high freight rates along the Rhine, with freight rates for barges from Rotterdam to Basel reaching a fresh record-high of $186.20/mt Wednesday, S&P Global Platts data shows.

A BWL spokesman said the authorities were monitoring the situation closely and it would take further measures if necessary.

Northwest European cargoes and barges of ultra-low sulfur diesel trading in the Amsterdam-Rotterdam-Antwerp hub jumped to three-year highs against ICE low sulfur gasoil futures Wednesday on limited prompt availability in the region.

FOB ARA ULSD barges were assessed at a $19.50/mt premium to the front-month ICE gasoil futures Wednesday, up from $11.75/mt Tuesday.

Traders said the limited prompt availability of diesel in NWE was due to a closed arbitrage from the US to Europe, an arbitrage from the East of Suez that had only re-opened recently, meaning arrivals from the East were still relatively low, slightly smaller exports from Primorsk in early November and increased demand for cargoes to be delivered to Northern Germany.

--Leon Izbicki, leon.izbicki@spglobal.com

--Virginie Malicier, Virginie.malicier@spglobal.com

--Edited by Jonathan Dart, jonathan.dart@spglobal.com