Oil product prices were expected to be steady or show modest gains in the coming days but looming refinery restarts and sketchy demand prospects could cast a pall on gasoline and distillates, traders said.
Gasoline prices may steady in the coming days after last week’s steep falls against crude as export cargoes continued to flow both westward across the Atlantic and eastward to the Middle East, while futures prices supported European values.
At least half a dozen arbitrage cargoes are due to load this week. Rates on the voyage from Europe to the US rose around 40 points last week, reflecting increased interest in exports.
Traders were waiting for further indications on cargo demand when the US switches to summer grade at the beginning of next week.
Cash barges’ premium to North Sea BFO crude, which last week declined by around $5 from the previous week, regained a few cents to trade around $4.80.
But crack swaps continued to weaken on expectations that backwardation and declining US fuel demand would keep up pressure on European gasoline. May cracks were valued around $4.15. Europe’s benchmark gasoline barges were offered at $949 per tonne, with cash values pegged $1 below swap levels for the balance of April and around $3 above May levels, trade sources said.
Heating oil and diesel were expected to remain strong this week after a spate of maintenance shutdowns in Europe and Russia and a trickle of exports to South America.
Even as traders reported refinery maintenance tightening supply in the Baltic, trading house Vitol loaded a cargo of Russian gas oil in Ventspils for delivery to Brazil over the weekend.
“Argentina is pulling from here and the Gulf Coast,” a European gas oil trader said.
Traders were less certain of demand in Europe, where some of this month’s maintenance related shorts appeared to be covered and traders were looking ahead to refinery restarts at the end of the month. Data on German consumer heating oil stocks showed Europe’s largest fuel consumers were letting their tanks run low rather than paying up as gas oil prices rallied toward last week’s new record high.
“The overall picture is still bullish. Prices have been pulled up by Asia while we see sustained support in Europe,” one trader said.
