By LANANH NGUYEN
European diesel will probably stay depressed this summer
after plunging to the lowest for this time of year since 2003
amid surging imports from Russia and the .S.
Barges of diesel traded at $9/ton more than the June gasoil
contract on the ICE Futures Europe exchange on May 19.
Thats the lowest premium in more than three months and
a drop of 66% from April 15, according to data compiled by
. Gasoils crack spread, a measure of
profit to be made from refining
the fuel, declined 18%
since mid-April to about $12/bbl on the ICE exchange.
Europe looks extremely well supplied, Steve
Sawyer, an analyst at FGE, a consultant, said by phone from
London. I would expect both Russian and US refiners to
be pushing their rates during the summer and looking to Europe
to dispose of the
Diesel premiums in Europe
typically rise in May as
traders buy supplies in anticipation of peak driving demand
from tourists and truckers, said Ehsan Ul-Haq, a senior
market consultant at KBC Energy Economics in
Walton-on-Thames, England. This year theres
nothing which can support diesel, with demand weak and
supply increasing, he said.
While diesel barges recovered from their earlier low to trade
at a premium of $11/ton to June gasoil in the Amsterdam-
Rotterdam-Antwerp oil hub on May 20, according to data
compiled by Bloomberg, this year an abundance of
shipments from other regions will probably overturn the usual
Diesel prices have wallowed amid poor European demand
and rising Russian supply, with few signs of either trend
letting up, analysts at Energy Aspects, a researcher in
London, said in a report.
Europes imports of diesel and gasoil from countries of
the former Soviet Union averaged about 629,000 bpd so far
this year, up from 559,000 in 2013, FGE estimated. Shipments
from the US to Europe have risen to about 321,000 bpd in
2014, from 304,000 last year, with flows doubling in January
and February compared with 2013, according to FGE.
The continents diesel surplus may prompt Europe
an refiners to respond by
cutting production, analysts at researcher JBC Energy GmbH in
Vienna, led by David Wech, said in an e-mailed note.
Pressure is coming from all fronts, JBC said.
Summer is unlikely to provide much room to the