LONDON: Diesel barge differentials in northwest Europe held steady on Thursday in a quiet market as IP Week continued, but gasoil stocks, which include diesel, hit a 16-year high following a period of intense stockpiling by traders.
Data from Dutch oil consultants PJK International showed gasoil inventories rising to 3.065 million tonnes in independent storage at the Amsterdam-Rotterdam-Antwerp pricing hub, the highest level since March 1999.
Traders have been stockpiling to take advantage of a contango market structure, which has now been eroded, and ahead of seasonal maintenance at European refineries.
"There is demand for 10 ppm (diesel) all over the place, from lower flat prices, cold weather, and storage players," one trader said. This contrasted with a lack of any real demand on the jet fuel side, a broker said.
"The economics are now marginally in favour of diesel again, however, which we haven't seen since early December," a jet fuel broker said. This might encourage refiners to maximise diesel output over jet, which could ultimately boost jet fuel premiums. French oil major Total said it would halve capacity at its Lindsey refinery in Britain by closing one of the crude distillation units.
Total will also make investments to improve the refinery's conversion capacity. The restructuring is expected to be completed by the end of 2016, the company said.
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