Europe Distillates-Cracks rise to four-month high on firmer demand

Northwest European diesel barge refining margins climbed to their highest since late March at about $27 a barrel on Friday, even as regional stocks rose, amid stronger demand.

ARA gasoil stocks rose in the week to Thursday by around 3% to 1.985 million tonnes, according to data from Dutch consultancy Insights Global.

U.S. distillate stockpiles, which include diesel and heating oil, rose last week by 14,000 barrels to 118.2 million barrels, EIA data showed. EIA/S

Analysts at consultancy FGE Energy expect middle distillate stocks to start drawing as OPEC+ cuts slash supplies of medium sour crudes, which are ideal grades for producing diesel.

The U.S. Gulf Coast has overtaken the Red Sea as the primary source of diesel resupply into Europe, with three 60,000 tonne and four 38,000 tonne vessels fixed on the route in the last few days, according to Sparta Commodities analyst James Noel-Beswick.

The transatlantic arbitrage has nevertheless closed in recent days after freight rates on the routes rose, he added.

Diesel imports into Europe are expected to have hit 6.62 million tonnes so far in July, according to Refinitiv ship-tracking data, compared with 6.3 million tonnes in June.

Exports from the Middle East rose sharply, with Saudi Arabia accounting for 1 million tonnes and Kuwait at 714,000, Refinitiv analyst Raj Rajendran wrote in a note.
Source: Reuters (Reporting by Ahmad Ghaddar; Editing by David Holmes)