London (Platts)--28Feb2013/749 am EST/1249 GMT
Diesel has become the more profitable product for European refiners on bullish global supply pressures, displacing jet after nearly three months, according to trading sources and Platts data. The 10 ppm FOB Rotterdam barge crack -- the value of the product versus crude -- was assessed at $18.32/barrel Wednesday, while its jet counterpart was at $17.82/b, Platts data shows. Trading sources said refiners would now be considering making the switch to maximizing production of ultra low sulfur diesel, while some said the change could already have happened in places. "Diesel has performed well the last few days. Leaning less toward it being max jet than where we have been," said a source at one oil major. Rotterdam diesel barges were assessed at a premium to March ICE 0.1% gasoil futures of $31/mt Wednesday, up sharply from their lowest since late 2009 of $3.50/mt on February 5, and at their highest since November 29, 2012, Platts data shows. Article continues below...Sign up to Oilgram News today. Oilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more.
Diesel has become the more profitable product for European refiners on bullish global supply pressures, displacing jet after nearly three months, according to trading sources and Platts data. The 10 ppm FOB Rotterdam barge crack -- the value of the product versus crude -- was assessed at $18.32/barrel Wednesday, while its jet counterpart was at $17.82/b, Platts data shows. Trading sources said refiners would now be considering making the switch to maximizing production of ultra low sulfur diesel, while some said the change could already have happened in places. "Diesel has performed well the last few days. Leaning less toward it being max jet than where we have been," said a source at one oil major. Rotterdam diesel barges were assessed at a premium to March ICE 0.1% gasoil futures of $31/mt Wednesday, up sharply from their lowest since late 2009 of $3.50/mt on February 5, and at their highest since November 29, 2012, Platts data shows.
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Traders cited the onset of the refinery maintenance season in Europe, high US wholesale diesel prices and lower-than-usual flows from Russia and India as the main reasons for the increase. A source at a second oil major said: "People are probably not maxing jet production right now. I think that decision was probably taken a couple of weeks ago." Refiners in Europe, as well as in the Persian Gulf and India, had capitalized on a bearish diesel market over the winter to increase jet output. Jet margins have largely held above diesel since December 3, the longest period since March-May 2011, Platts data shows. A switch back to diesel could quickly cause the small prompt overhang on the local jet market to disappear. The FOB Rotterdam jet barge premium to gasoil was assessed at $83.25/mt Wednesday, unchanged on the day and $12.25/mt below CIF Northwest European cargoes. The discount of jet barges to cargoes hit its widest in 17 months on Tuesday of $13.25/mt. The gulf between the two markets reflects the ample supply for barges against a lack of arrivals from the Persian Gulf, the mainstay of jet resupply for Europe which is net short.--David Elward, david_elward@platts.com--Olivier Lejeune, olivier_lejeune@platts.com--Edited by Jonathan Dart, jonathan_dart@platts.com
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