European diesel barge swaps weakened in the week to Monday as huge product inflows from the United States and Russia continue to put heavy pressure on prices.
Diesel imports from the U.S. Gulf Coast were expected to exceed 2 million tonnes in June for the second month in a row as U.S. refineries increase production following maintenance.
Demand in Europe is nevertheless lukewarm, resulting in ample supplies in the region, traders said. "While there are early signs of refinery runs being cut, particularly in Asia where Urals (crude oil) prices are weakening despite lower Russian exports, all signs point to a prolonged period of weakness in global distillates prices," said Robert Campbell, analyst at Energy Aspects consultancy.
With diesel refining margins dropping to a two-year low last week, European refiners might reduce operating rates in June, which could spark a recovery in July, he added.
Gasoline swaps for June slightly weakened as arbitrage opportunities to the U.S. East Coast remained limited but still found support in demand from West Africa, traders said.
- The June gasoline barge swap was trading at $1,008.18 a tonne fob ARA, down from $1,015.77 a tonne fob ARA last week. The July swap was at $1,003.64 a tonne.
- The May barge crack swap was trading at around $11.17 a barrel, up slightly from $11.11 a barrel last week.
- The June cargo swap was trading at about $939 a tonne cif NWE, down from $942.62 a tonne cif New last week. The July swap was trading at $913.54 a tonne.
- The June crack swap was at minus $4.37 a barrel, stronger than last week's minus $3.68 a barrel.
- The East-West spread for June narrowed significantly to about $7.75 a tonne from about $11.25 a tonne last week.
- The June ICE gasoil futures contract was down $2.50 at $890.00 a tonne.
- The May-June gasoil contracts <LGO-1=R> were in a contango of $1.25 a tonne.
- The June gasoil barge swap traded at $889.51 a tonne fob ARA, down from $916.75 a tonne last week.
- The June diesel barge differential swap was about $8.75 a tonne fob ARA, lower than last week's $9 a tonne. The July barge swap was at around $9.50 a tonne.
- The June diesel cargo differential swap was about $10.25 a tonne cif NWE, down from $11 a tonne last week.
- The June Mediterranean diesel cargo differential swap was at about $11.87 a tonne cif Med, down from $15 a tonne.
- The June jet fuel cargo differential swap was at $38.63 a tonne cif NWE, weaker than last week's level around $47.20 a tonne. The July differential swaps was at a $38.63 tonne.
- The premium on fuel oil with 1 percent sulphur content over fuel oil with 3.5 percent sulphur, known as the hilo, was about $49.49 a tonne for June, down from $57.59 a tonne last weekk. The hilo for July was at $46.31 a tonne.
(Reporting by Lin Noueihed, editing by David Evans)