German diesel, gasoil supply disrupted on strikes, low Rhine water

06 September 2013 16:32  [Source: ICIS news]

LONDON (ICIS)--Diesel and gasoil supplies into Germany have been disrupted by low water levels along the key trading route of the Rhine and by a German canal workers' strike, industry sources said on Friday.

"There is less water in the Rhine, so supply from ARA into Germany of 50ppm [gasoil] is difficult," a trader said.

The threat of renewed industrial action by German canal and lock operators may impact supply, traders said. The on and off strikes that have lasted more than a month is expected to resume on Monday 9 September, sources said.

"When the locks are closed and there is not much water, then it is difficult to transpot from ARA down the Rhine," the trader said.

However, supply disruptions could be offset by regional demand, which is slow due to a rise in prices on the back of high upstream crude oil values, and as a result of summer holidays.

"Demand is not strong, because in some parts of Germany there are holidays, and also because of high oil prices," the trader said.

Slow demand for gasoil is also being driven by seasonal factors, as demand for heating fuel normally declines during summer.

A second trader said there were "sufficient stocks" to meet demand, but an extended strike could reduce inventory levels.

"High temperatures are keeping demand for 50ppm [gasoil] low. Southern Germany is still on holiday. But in case strikes continue into second half of September, I would guess that some places will start getting dry," the second trader said.

Some of the product that is being transported by pipes rather than barges will find its way into the country, a third trader said. There is no panic as the market is still "long" on gasoil and diesel, despite the fact that "some tanks are emptying in Germany and France", it said.

Gasoil and diesel supply is also expected to tighten in September and October because of the autumn refinery maintenance season.

($1 = €0.76)

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By: Cuckoo James
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