Regístrese hoy mismo

y en menos de un minuto podrá acceder a:Titulares de última horaAnálisis y reportajesVídeos, podcasts y blogs sobre materias primasMuestras de precios e información de mercadoInformes especialesAvisos a los suscriptores y alertas diarias por correo electrónico

¿Ya tiene una cuenta?

Inicie sesión para registrarse

¿Olvidó su contraseña?

En esta lista
Petróleo | Petroquímicos

European outright refined product prices hit 5-month highs amid mixed fundamentals

Gas natural | Petróleo

Platts Scenario Planning Service

Energía | Energía eléctrica | Renovables | Energy Transition

CERAWEEK: Colombia acelera las reformas para atraer inversión en la generación de energía limpia

Energía | Energía eléctrica | Renovables | Energy Transition

CERAWEEK: Colombia acelera las reformas para atraer inversión en la generación de energía limpia

European outright refined product prices hit 5-month highs amid mixed fundamentals

London — Outright prices for several European products firmed to five-month highs on Aug. 5, led higher by moves in the underlying energy complex.

¿No está registrado?

Reciba alertas diarias y avisos para suscriptores por correo electrónico; personalice su experiencia.


The front-month ICE low sulfur gasoil futures contract, which underlies the European distillates markets, was assessed by S&P Global Platts at $388/mt, the highest level since March 6, when Platts assessed the contract at $413/mt as energy prices collapsed in the wake of the coronavirus crisis.

The latest rise was mostly down to moves in the crude oil market, which rose following bullish US stocks data released on Aug. 5.

At 11:40 am London time (1040 GMT) Aug. 6, the front-month ICE Brent October crude futures was trading at around $45/b, down 17 cents/b from the Aug. 5 settle of $45.17/b, a five month high for the front-month contract.

US commercial crude oil inventories decreased by 7.4 million barrels to a total of 518.6 million barrels in the week ended July 31, according to the weekly inventory report released Aug. 5 by the Energy Information Administration.

This comes despite fears that demand could be stymied by rising cases of coronavirus.

While demand for oil products has been recovering, fears remain over a resurgence in coronavirus cases across Europe, with several regions that have relaxed lockdown measures now seeing a spike in cases again.

One trader also pointed to the potential for the rising outright prices to weigh on distillate product demand, as end-users are dissuaded from buying.

"There is very little demand at the moment, with higher flat prices. I expect demand to be hit even further," the trader said.

Typically, demand for some products can be hit by rising outright prices, with demand for some products more sensitive to price moves than others.


Diesel is usually relatively resilient to changes in outright price, compared with other products, with demand remaining tied to economic activity.

Diesel demand has been picking up across European countries, despite fears of a potential resurgence of coronavirus. Overall, demand for road fuels in European countries strongly ramped up after the lifting of lockdowns and easing of travel restrictions.

Consumption of diesel in particular was reported to have reached between 75% and 95% of last year's level in July, in the wake of plunging demand when lockdowns were imposed in March.

In Turkey, however, diesel demand was even higher year-on-year. Turkish diesel demand in July rose 7.5% year on year to 1.965 billion liters, energy ministry data showed.

The increase is below the 8.2% reported in June, but still a stark contrast to the fall of 27.7% in May, when travel restrictions were still in place.

In the 10 ppm diesel barge market, "demand is still there, a bit weaker than this time last year -- sufficient demand," one barge trader said.

"Overall the first two decades in July, diesel demand in France was down a little year on year," the trader added.

"There is no problem for supply, freight is down a lot due to weak demand and Rhine water levels should be rising, due to heavy rain in Switzerland. Barges are loading 70-80% [due to Rhine water levels at present]. We weren't expecting such a low freight rate," the trader said.


Looking at the gasoil market, the 0.1% CIF Northwest Europe cargo increased $16.50/mt on the day to $386.75/mt on Aug. 5, the highest since March 6, Platts data shows.

Demand for heating oil is particularly price-elastic, especially in summer, sources said.

Nonetheless, demand in Northwest Europe has been very poor since the beginning of July after the buying spree in the spring, when first a low price environment and then a deep contango incentivized buying of 0.1% gasoil and 50 ppm volumes. Most of the heating oil bought in the spring went into stocks, and storage of heating oil in the region is mostly full.


CIF NWE jet fuel cargoes rose $16.75/mt on the day to a four-month high of $366.50/mt on Aug. 5, with CIF cargoes assessed at a $21.50/mt discount to the front-month ICE LSGO futures contract, down from a $21/mt discount the previous day. The last time CIF NWE jet cargoes were assessed higher was March 11, when they were assessed at $382/mt, Platts data shows.

On the positive side, global flying capacity increased 4.3% on the week to 60 million seats for the week starting Aug. 3, but this is still almost 50% less than a year before, aviation information provider OAG said.

According to OAG, western Europe benefited from the strongest weekly growth, with a 15% increase and the addition of 1.524 million seats, bringing the total capacity for the current week to around 12 million seats.

Easyjet now expects to increase flight capacity to 40% of pre-coronavirus planned capacity in the fourth quarter of its October-September fiscal year, up from the 30% forecast at the end of June, the UK-listed low-cost airline said in a trading update Aug. 4.

In addition, jet and kerosene inventories at the Amsterdam-Rotterdam-Antwerp trading hub slipped 4.8% week on week to 937,000 mt as of July 29, according to Insights Global data released July 30.

However, long-haul flight capacity from Europe remains limited, hampering any real recovery in jet fuel demand.

Virgin Atlantic warned a UK court on Aug. 5 that cash flow would drop to critical levels by the middle of next month and it would run out of money altogether by the week beginning Sept. 28, according to media reports.

The airline, which is specialized in long-haul international routes departing from the UK, filed for chapter 15 of the US bankruptcy code in New York on Aug. 4 as part of a process to protect its assets from US creditors while it seeks to finalize a rescue plan in the UK.

Meanwhile, the forward curve for jet fuel prices has been weighed down by expectations that jet fuel demand would lag for many months if not years to come. The year one jet fuel swap, now Cal 2021 hit a fresh record low of $12.50/mt on August 5, the lowest level seen since Platts started assessing the contract in 2001.


After rising to the highest levels since the start of the pandemic to be assessed around the $400/mt mark for much of July, European gasoline prices have plateaued, and showed signs of retreating at the start of August.

Eurobob FOB AR barge outright prices have averaged $378.50/mt during in the two weeks to Aug. 6, down from $389/mt in the preceding two-week period from July 9-23.

Sources in the market had earlier anticipated a more robust recovery in gasoline demand in August, with demand expected to return to close to pre-pandemic levels. However, weaker sentiment in some key export markets and concerns over rising virus cases in Europe have weighed on sentiment.

Gasoline stocks have continued to build, with Insights Global data showing a 4.9% rise in ARA gasoline stocks in the week to July 30, and a 5% rise in the preceding week to July 23.

West Africa is a key outlet for excess European gasoline stocks. But buying demand in Nigeria was lower than expected in July, as poor blending margins deterred suppliers into the market. Data intelligence company Kpler showed that exports to Nigeria from Northwest Europe in July rose by just 5% on the month, to 5.26 million barrels. The US is also an export market for gasoline from Northwest Europe, and data from the EIA has pointed to a weakening demand outlook, and rising gasoline stocks. EIA data shows that gasoline exports from Northwest Europe to the Atlantic Coast were 50% lower on the week to Aug. 6, at 860,000 barrels.

This may continue to exert some downward pressure on prompt and forward contracts, or keep a lid on gains in outright prices in European gasoline markets.

In a further sign of a more bearish outlook, the front-month gasoline crack spread has retreated from an average of $4.22/b in July, to $1.20/b on Aug. 5.


European naphtha outright prices had seen a downward correction recently, incorporating information on loss of demand due to petrochemicals producers maximizing propane utilization rates since the beginning of July against naphtha on a wide price differential.

CIF NWE naphtha closed at $371/mt on Aug. 5, down 1.8% on the week with the crude oil complex-induced volatility also having an impact on the market. Although naphtha will continue seeing marginal support for any additional increase in feedstocks demand, a switch back was not expected soon despite a narrowing premium to propane.

Over the past week, the CIF NWE front-month naphtha contract against the equivalent propane contract declined 39% to close at $45/mt on Aug. 5.

Supply remained stable, with limited runs across Europe and limited exports for August expected from out of Russia.