NWE diesel cargoes at 4-month high over gasoil futures on reduced supply
Ultra-low sulfur diesel cargo prices in Northwest Europe rose to a four-month high against ICE low-sulfur gasoil futures Monday on a closed arbitrage from the US, a smaller Primorsk export program and steady demand.
CIF NWE cargoes of ULSD were assessed at a four-month high of $632.75/mt Monday, up $8.25/mt on the day, and were at a $7/mt premium over front-month ICE low-sulfur gasoil futures, the highest since November 26, S&P Global data showed.
“The NWE market looks rather strong in the prompt, afterwards it seems more balanced,” a trader said, adding finding spot cargoes for April was difficult. “We are looking to buy some LR2 [of diesel] but it is not easy, we find them only in dribs and drabs of cargoes.”
The diesel arbitrage from the US Gulf Coast is closed, and the April export program from the Russian Baltic Sea port of Primorsk is slightly smaller than in March, reducing supply into Northwest Europe, sources said.
The April Primorsk ULSD export program is scheduled to be around 1.166 million mt, down 16% from March’s shipments, according to trading and shipping sources.
The month-on-month drop in Primorsk exports was reportedly due to the start of agricultural demand for diesel in Russia, as well as planned maintenance at some Russian refineries in April.
An uptick in agricultural diesel demand is typically seen across Europe in April.
Some 570,000 mt of middle distillates from the US Gulf Coast are scheduled to arrive into Europe in April, with 410,000 mt bound for Northwest Europe and 160,000 mt for the Mediterranean, data from Platts trade flow software cFlow showed. However, only three vessels have left the US Gulf Coast for Europe since the start of the month, according to cFlow. Two are Medium Range tankers and one is a Long Range tanker.
A strike by Dutch union CNV at Shell’s sites in the Netherlands — the 404,000 b/d Pernis refinery and its Moerdijk petrochemical site — started Monday, Shell said. The union was planning to reduce runs at some of the units at the two sites, it said last week. The company said the industrial action would have an impact on production.