LONDON: European diesel’s six-month spread hit its widest backwardation since March 2008 on Friday, reaching $66.25 a tonne on tight supplies, Refinitiv Eikon data showed.

Backwardation is a market structure whereby prices for nearby delivery trade at a premium to prices for delivery in the future. It usually indicates a tight market.

Lower shipments from Asia and the United States have tightened supplies in Europe, pushing European benchmark diesel cracks well above the five-year average.

Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area fell almost 4% to 1.625 million tonnes in the week to Thursday, reaching their lowest levels since May 2014, data from Dutch consultancy Insights Global showed.

Adding to the tightness, Shell’s 400,000-bpd Pernis refinery in the Netherlands, Europe’s largest, will go into maintenance until June.

“Inland diesel demand is starting to kick in in Europe which could push demand up,” one trader added.

Diesel prices have also seen support from a recent rally in global gas prices, which have increased the cost of hydrogen used in refiners’ desulphurisation processes, traders said.