14 May 2013 23:59 [Source: ICIS news]
LONDON (ICIS)--Continued weak aviation demand and open arbitrages for jet kerosene to Europe could cause local run rate cuts, a source said on Tuesday.
During the past week and month, offers in the open market window for cargoes have outnumbered bids, as arbitrages from the Middle East and Asia to Europe remain open.
A trader said that though not all refineries are back from maintenance, there is talk of rate cuts.
“The situation will depend on the arbitrage, barges might get stronger than cargoes and June looks to be a weak month with lots of product coming in.”
Maintenance for a number of European refineries overlapped in April, which saw some tightness on the barge market and barge differentials higher than cargoes.
However, market participants said demand was limited, which was contributing to the overall quiet conditions following European public holidays last week.
Despite recent market talk of high stocks with buyers capitalising on a contango market structure, stocks in the ARA (Amsterdam-Rotterdam-Antwerp) region were at 332,000 tonnes on 10 May, down from 375,000 tonnes the previous week.
A source said stock levels are acceptable, but market players are cautious of taking too much risk.
The source said stocks are low compared with 2011, when they were around 500,000 tonnes, however, arbitrage opportunities have changed since then, allowing more product to be moved by ship.
BP has been the most active buyer in the barge market in the past five trading days (May 8-14), picking up three out of the six barges traded.
Barge prices were $918.75-920.75/tonne (€707-709/tonne) FOB (free on board) ARA on Tuesday.
($1 = €0.77)
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