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ARA barge market sees 50 ppm gasoil at 22-month low versus ULSD

London (Platts)--11 Oct 2017 950 am EDT/1350 GMT


Strong selling pressure in the 50 ppm gasoil barge market in the Amsterdam-Rotterdam-Antwerp region has sent its spread to 10 ppm ultra low sulfur diesel hit its lowest point in 22 months.

The 50 ppm gasoil market was assessed Tuesday at a $10.50/mt discount to 10 ppm diesel Tuesday, the lowest level since November 12, 2015, when it was at an $11.00/mt discount, S&P Global Platts data showed.

The backwardated market structure across distillates has contributed to an industry-wide move to destock from tanks across Europe, as storage plays are no longer lucrative, sources said.

The spread across October and November ICE low sulfur gasoil futures was assessed at $5.00/mt backwardation Tuesday, $1.00/mt wider day on day.

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In addition to the influx of 50 ppm gasoil offers pressuring prices, consumers of this heating fuel in the region are less willing to buy given the relatively high outright price environment of late.

End consumers of heating fuel in Northwest Europe are known to be highly sensitive to flat prices, forcing suppliers to reduce offers further to attract buying interest.

The outright price for 50 ppm gasoil FOB ARA barges has remained above the $500/mt mark since early September, and was assessed at $519.50/mt Tuesday, up $13.50/mt day on day.

While the 50 ppm barge market has been weakening, diesel has been heading in the opposite direction, despite being subject to similar market forces and incentives.

Heavy selling at the prompt had led the FOB ARA differential to the front month ICE low sulfur gasoil contract reaching a seven-month low of $3.50/mt last week.

However, the Platts Market on Close assessment process has seen a resurgence of buying interest in the past few days, leading the market being assessed at a discount of $1.25/mt Tuesday.

The strength has come despite inland European markets running down stocks because of the backwardation. However, much of the recently traded volume was said to be staying in the region, rather than traversing inland waterways.

--Ahila Karan, ahila.karan@spglobal.com
--George Shaw, george.shaw@spglobal.com
--Edited by Dan Lalor, daniel.lalor@spglobal.com




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