Europe gasoline up $2.50-9.00/tonne despite closed US arbitrage

10 June 2013 16:42  [Source: ICIS news]

LONDON (ICIS)--European gasoline prices have increased by $2.50-9.00/tonne week on week despite sluggish demand, industry sources said on Monday.

The arbitrage to the key US export market is closed, leaving Europe with very little chance to export surplus stocks.

A gasoline trader said: "The arbitrage to the US is shut. It is all pretty thin. [But especially] on barges [it is] very weak.”

A rise in July ICE Brent crude oil futures over the period has exerted upward pressure on gasoline prices.

July ICE Brent crude oil futures rose by almost $2.00/bbl from $102.00/bbl at 16:30 GMT on 3 June to $103.84/bbl at 13:10 GMT on Monday.

Early Monday afternoon, gasoline traded at $961-965/tonne (€730-733/tonne) FOB (free on board) ARA (Amsterdam-Rotterdam-Antwerp), up from $952-962.50/tonne on 3 June.

Swiss trader Gunvor sold 2,000 tonnes of European EuroBob gasoline grade to Dutch trading firm Trafigura. Trafigura, in turn, sold 2,000 tonnes of Eurobob gasoline to Swiss trader Vitol.

EuroBob grade is considered a benchmark in the physical gasoline markets in northwest Europe.

Gasoline futures contracts also increased in line with the higher crude oil futures contract.
July ICE RBOB gasoline futures rose by 2% – a higher margin than physical gasoline – from $2.8021/gal at 16:30 GMT on 3 June to $2.8589/gal at 13:10 GMT on Monday.

Gasoline fundamentals in the US and Europe, along with domestic petrochemical margins, have traditionally charted the course of naphtha demand in Europe.

The main application of naphtha is in the petrochemical production of olefins. Naphtha is also used as a feedstock for gasoline blending.

($1 = €0.76)

By: Cuckoo James
+44 (0) 208 652 3214

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