LONDON: Benchmark diesel refining margins in northwest Europe firmed on Wednesday as maintenance and weeks of limited arbitrage helped erode an overhang of unwanted product.
Fixtures indicated a rising flow of diesel and jet fuel from the Middle East and Asia, with more than 1 million tonnes of diesel already booked. This was still well below the near-2.5 million in February.
Cargoes that had been floating with stored distillates had mostly discharged, cutting the backlog of unwanted inventories in the Amsterdam-Rotterdam-Antwerp hub.
Still, storage tanks on land were at notably high levels, which was likely to put downward pressure on margins in the coming weeks.
US distillate stockpiles, which include diesel and heating oil, fell 1.1 million barrels, according to US Energy Information Administration data.
The diesel arbitrage from the US Gulf Coast was open, and a drop in refinery maintenance is expected to pump more distillates into the Atlantic Basin.
For the latest European refinery outages: REF/E
GASOIL
Vitol sold to BP two barges with a sulphur content of 0.1 percent, one at flat to spot prices and the other at a $1 a tonne fob ARA discount.
No cargoes traded.
Total sold to Belgomine one barge of 50 ppm sulphur gasoil at a discount of $6 a tonne fob ARA to the April Low Sulphur Gasoil futures, compared with Tuesday's trade at a $4 discount.
April Low Sulphur Gasoil futures were $13.50 a tonne higher at $363.50 by 1729 GMT.
The April and May contracts were trading in a contango of $3.25 a tonne, 75 cents narrower than a day earlier.
Diesel refining margins stood at $9.40 a barrel, up from$8.79 a barrel.
DIESEL
Seven diesel barges traded at discounts of $3 to $6 a tonne fob ARA versus April diesel futures, compared with $6 to $6.75 a tonne discounts on Tuesday. Gunvor sold to Vitol, Total, Mabanaft, BP and Shell.
Noble sold to Litasco one cargo at a $5 a tonne cif La Nouvelle premium to April diesel futures.
JET FUEL
No jet fuel barges traded. BP bid to a $16 a tonne fob ARA premium to April diesel futures, while Shell offered. This compared with Tuesday trades at $13 a tonne above April diesel.
No cargoes traded. Vitol offered three at premiums of $16 a tonne cif Rotterdam to the April diesel futures, while Shell bid for one at a premium of $19 a tonne and BP bid at $20 a tonne over April.
FUEL OIL
Barges with a sulphur content of 3.5 percent traded at $149.25-$153.25 a tonne fob ARA, up from $143-$146.75 a tonne on Tuesday.
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