Europe gasoline prices drop $40/tonne week on week on Brent fall

26 June 2013 14:52  [Source: ICIS news]

LONDON (ICIS)--European gasoline, or petrol, prices have decreased by approximately $40/tonne week on week on lower crude oil values, industry sources said on Wednesday.

Moreover, the arbitrage to the US continues to be unworkable and has led to a build up in gasoline stocks at the ARA (Amsterdam-Rotterdam-Antwerp) hub, as evidenced by independent stock data gathered at the ports.

A gasoline trader said: "[The] arbitrage looks pretty shut to the U.S. at the moment.”

On Wednesday, gasoline traded at $931/tonne FOB (free on board) ARA, down from $972-973/tonne on Wednesday 19 June.

French oil and petrochemicals major Total sold 1,000 tonnes of the European EuroBob gasoline grade to the Dutch trading firm Trafigura.

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

A fall in the August ICE Brent crude oil futures since last week is considered to be the primary reason behind the gasoline price fall.

August ICE Brent crude oil futures fell by around $5.00/bbl from $106.08/bbl at 16:30 GMT on 19 June to $101.25/bbl at 14:20 GMT on Wednesday.

Gasoline futures contracts also decreased in line with the lower crude oil futures contract.

July RBOB gasoline futures trading at the IntercontinentalExchange (ICE) fell by 6% week on week, a higher margin than the 4% price fall in physical gasoline.

The ICE RBOB futures fell from $2.8886/gal at 14:30 GMT on 19 June to $2.7278/gal at 13:30 GMT on Wednesday.

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)

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By: Cuckoo James
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