Europe VGO premiums fall on poor buying appetite

09 August 2013 16:10  [Source: ICIS news]

LONDON (ICIS)--European vacuum gasoil (VGO) premiums against ICE Brent crude oil futures have fallen from the previous week on poor buying appetite, industry sources said on Friday.

Premiums in the low-sulphur (LS) northwest European VGO markets fell to $6.5/bbl (€4.9/bbl) from $8/bbl last week.

Demand from the key US market continues to be sluggish, a VGO trader said.

A second VGO trader said: "Market is long for low and high sulphur, and [the] US are not buying anything. LS normally is exported to the US."

The refinery maintenance season in Europe, due in September, is likely to create surplus VGO supply, the second trader said. The backwardation in ICE Brent crude oil futures was discouraging buyers from purchasing now, and selling in the future, it added.

Meanwhile, high-sulphur VGO premiums fell from $6.50/bbl last week to $5.50/bbl on Friday.

VGO is used as a refinery feedstock to produce distillates, and is the primary feedstock for European base oils.

($1 = €0.75)

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By: Cuckoo James
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