LONDON: Diesel margins remained narrow despite a fall in Brent on Monday, prompting talk of delays to refinery restarts in north-western Europe.
Surging oil prices in the past week have cut into crack spreads. Brent remained above $124 a barrel on Monday even after losing over $2 on the day.
"USLD has been incredibly weak ... There is a lot in storage, floating and in ARA; maintenance impact as well as lower US Gulf inflows have not helped clear that at all," said a trader, adding that a number of plants were thought to have extended maintenance programs.
Refiners' intake of feedstock crude was at 10.131 million barrels, 5.8 percent below last month's level and 6.5 percent lower on a year-on-year basis, industry monitor Euroilstock said on Monday.
The low uptake was at least partly related to the poor refining margins obtained during the first quarter.
Jet fuel prices were firm, however, supported by strong buying interest and ongoing clashes in Libya, which had supplied the market with 30,000 barrels per day of the product before the war.
The prospect of a stalemate or protracted war loomed.
GASOIL
* Liquidity remained low, with three barges trading in the afternoon window, with prices falling to discounts of $4.50 a tonne fob ARA to ICE gasoil futures, down from spreads of $3-3.50 a tonne on Friday.
* Shell continued to buy, picking up all three barges from Hetco, a broker said.
* April ICE gasoil futures contracts slid as oil markets retreated, dropping by 1.16 percent to trade at $1040.75 a tonne at 1704 GMT, while Brent slipped below $125 a barrel, falling by as much as $2 a barrel during the session.
* ICE gasoil cracks were wider than at the close on Friday, expanding to $14.36 a barrel around the same time, out from $13.85 a barrel at the end of trade last week.
* The backwardation for April/May dropped to $2 a tonne on Monday, in from $4.75 a tonne late on Friday.
* The ICE gasoil April/May spread touched a high of $8.25 a tonne on Thursday, while on Friday the differential topped out at $6 a tonne.
DIESEL
* Activity thinned in the diesel market, with only two barges trading, as BP sold to Vitol and Hetco sold to Total.
* Prices slipped, with barges trading at a premium of $15 a tonne fob ARA to May ICE gasoil futures and $11 a tonne fob ARA to April ICE gasoil futures respectively during the window.
* No cargoes traded during the window.
* A steady drop in diesel refining margins has prompted talk
of possible delays to refinery restarts, or cuts to output in favour of more profitable products.
* "Jet premiums are high enough to encourage refiners to come back online, cut back on diesel production and focus on jet. There are definitely good margins in the jet market," said a distillates trader.
JET FUEL
* Strong buying interest from a key player supported the barge market on Monday, according to a broker, with two barges changing hands during the window.
* Premiums were stable at $81 a tonne to May ICE gasoil futures and $81 a tonne to April ICE gasoil futures.
* No cargoes traded, in repeat of Friday's quiet session. Backwardation appears to have delayed an expected increase in the cargo market ahead of the holiday season.
* "People are reverting to hand-to-mouth supplies, only going for what they actually need at the moment," said a jet fuel
FUEL OIL
* Barges of low-sulphur fuel oil (LSFO) with 1 percent sulphur content traded at $727 a tonne fob ARA, steady after being discussed at $727-733 a tonne on Friday.
* Barges of high-sulphur fuel oil (HSFO) with 3.5 percent sulphur content edged up to $655-658 a tonne fob ARA, up from $648-653 a tonne on Friday.
* "The low-to-high sulphur spread differential remains very wide on the continued expectation that Japan will need to pull on Fuel Oil to replace the lost nuclear output," said Olivier Jakob from Petromatrix.
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