LONDON: Benchmark diesel refining margins in northwest Europe rose on Monday to a one-month high after floods that hit southern United States and unplanned refinery outages there tightened the supply outlook.
Traders said that concerns that heavy rains and flooding that has battered the southern US state of Louisiana could impact diesel production.
The arbitrage from the major US Gulf Coast refining hub to Europe has significantly slowed in recent weeks due to strong demand from Latin America and refinery outages.
Benchmark diesel refining margins stood at $9.40 a barrel, up from $9.12 a barrel on Friday, and the highest since July 13.
A blaze that broke out last Thursday at Motiva Enterprises 235,000 barrel per day (bpd) Convent, Louisiana refinery heavily damaged the structure of the heavy oil hydrocracker before being extinguished in the afternoon, sources familiar with plant operations said.
The fire-damaged hydrocracking unit at the refinery was surrounded by high water on Friday from heavy rains overnight, sources familiar with plant operations said.
Exxon Mobil Corp XOM.N said on Sunday operations at its 502,500 barrel per day (bpd) Baton Rouge, Louisiana refinery have not been affected by the floods.
Lower exports from Russia further helped support the market.
Although supplies in the region remained high, with several vessel still storing product off Europe's coast and other tankers heading to the region from Asia and the Middle East, according to Reuters shipping data.
Demand in the barge market was also weak due to high storage levels.
While a 50,000-barrels-per-day diesel-producing unit at Tupras' 220,000-bpd refinery in Izmit, Turkey, remained shut for unplanned maintenance, tightening supplies further traders said. GASOIL
No barges of 0.1 percent sulphur content gasoil traded. * No barges of 50ppm sulphur gasoil traded.
September Low-Sulphur Gasoil futures traded at $422 a tonne at 1543 GMT, up by $12.50 a tonne or 3.05 percent.
Benchmark diesel refining margins stood at $9.40 a barrel, up from $9.12 a barrel on Friday, and the highest since July 13.
The September contract traded in a contango of $6 a tonne to the October contract, unchanged.
DIESEL Seven barges traded at discounts of $7.50-$8 a tonne fob ARA to September diesel futures, compared with discounts of $5-$7 a tonne on Friday.
No cargoes traded.
JET FUEL
No barges traded. Trafigura and Shell bid for four barges, but there were no offers.
No cargoes traded. Vitol offered two cif Rotterdam.
FUEL OIL
Barges with a sulphur content of 3.5 percent fuel oil traded at $227.75-$230.75 a tonne fob ARA, compared with $222.50-$223 a tonne on Friday.
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