The Mediterranean ultra low sulfur diesel market faces ever greater dependence on attracting arbitrage flows to the region over the coming weeks, as the majority of local refinery production for August has already been placed, traders said Tuesday.
"Almost everyone is sold out," one Med trader said. "People run low stocks so less product is available around and if you raise your sales and you need to buy product then you struggle to find something around."
Motor Oil Hellas, a Greek refiner, has no diesel cargoes available until its September loadings, a source close to the company said.
Hellenic Petroleum, a second Greek refiner, is now restarting its Elefsis 100,000 b/d refinery after extensive upgrades, with product cargoes not expected until September, market sources said.
A source at Hellenic could not be reached for comment.
Italian refiners Saras, ERG and ENI were also heard to have low availability over August, with some traders going as far to say that they were sold out.
"Demand is quite high and Greeks and Italians are sold out," a second Med trader said.
Sources at ENI and ERG were unavailable for comment, while a source at Saras declined to comment on the matter.
Conversely, the Med market has seen good arrivals of cargoes from both Asia, the US Gulf Coast and Canada.
However, the relative strength of Northwest Europe's diesel market means that arbitrage cargoes from the USGC, a key source of diesel for Europe, are heading there, with the delivered cargo market into Le Havre at a $4.50/mt premium to the delivered Med cargo market, according to Platts data.
The Med CIF premium to the front-month ICE 0.1% gasoil futures was assessed at $33.25/mt Monday, a $2.25/mt climb over the day, Platts data shows, with the CIF NWE Le Havre premium assessed at $38.75/mt.
Source: Platts