Europe oil products players wary on Morgan Stanley

19 September 2008 16:21  [Source: ICIS news]

LONDON (ICIS news)--European products market players have expressed concerns over reports of credit difficulties at Wall Street banking giant Morgan Stanley, they said on Friday.

The US investment bank, which won a deal to supply crude oil and sell oil products on behalf of INEOS Refining in July last year, runs a physical distillate book and has been the major active seller in the jet kerosene barge market for some months.

Following reports that in the physical oil markets some trading houses had effectively stopped trading with the troubled bank over worries about its credit status, a number of products traders were anxious about the possible effects of a collapse or a buyout.

"The market is undeniably nervous about the situation with Morgan Stanley," said one distillates player.

"Right now it is difficult to properly assess market fundamentals because it is such a dominating issue."

Some heavy distillate participants were hopeful that either a buyout or a collapse would not have too drastic an effect on trading.

"I don’t think their book is that big at the moment to influence the market to a large extent if they have to liquidate their positions," said one source. "I think the market will absorb whatever happens."

The Europe jet fuel market could be worst-affected, however.

Already suffering from a serious airline industry slump in consumer demand, the kerosene market had an unseasonably quiet summer. Morgan Stanley had been the major seller for barge loads for many weeks.

"We don’t really know what’s going to happen," said one source.

"You would certainly expect liquidity to be affected," added another.

The Wall Street financial services organisation has been reported to be in talks of a merger with bank Wachovia Corp.

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By: Alex Davis
+44 20 8652 3214

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