13 June 2013 17:43 [Source: ICIS news]
LONDON (ICIS)--Export demand from South America and Africa has tightened supply in the European gasoil markets, even as domestic demand remains muted, market sources said on Thursday.
Physical deliveries of gasoil from northwest Europe are in demand in Egypt, Algeria, Turkey and Argentina, sources said.
On Thursday at 16.30 GMT, the August ICE gasoil futures contract was trading $0.25/tonne over the market for July, putting July and August prices almost on a par with each other.
The '"flat front spread" is a result of the tighter prompt supply and better demand compared with two weeks ago when the market was in proper contango, a trader said.
"For the moment there is only limited product at the front," the gasoil trader said.
Independent stock data on Thursday revealed that gasoil stocks at the Amsterdam-Rotterdam-Antwerp (ARA) hub had fallen sharply from last week, lending support to market commentary on healthy export demand.
"Yesterday there was a contago around $1.50/tonne but it [the market for July]is at present much stronger at a contango of $0.25/tonne now, so almost flat. All looking a bit stronger again," a second trader said on Thursday afternoon.
The export demand from Argentina is being driven by seasonal factors, the second trader added. In the other markets, "they have been writing out tenders [during the] last few weeks and [companies] like Litasco, BP, Shell, Glencore etc [have] won these tenders," it said.
A third gasoil trader said: "BP took quite a bit of product, but they also sold a lot of product."
Demand for gasoil in Europe has eased. "There is the usual structural demand in Europe, [but] it is poor," the third trader added.
($1 = €0.75)
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