Posted on 12/31/2008 8:30:12 AM PST by thackney
Despite a steep contango in the forward market, a lack of ULSD in tank continues to support European barge premiums with particular tightness in the prompt market, said market sources Wednesday.
Platts assessed 10 ppm ULSD barges at $445/mt on Tuesday, representing a premium to ICE gasoil futures of $28/mt. The premium has increased by more than $10/mt in the past week, according to Platts data.
Despite an open arbitrage through much of December that attracted significant volumes of diesel from the US Gulf into Europe, there remains a lack of diesel in storage locations in Rotterdam, Antwerp and Amsterdam, according to traders.
"There has been significant volumes of oil arriving in to Europe from the US," said one trader, "but very little of this is finding its way into ARA."
The ULSD physical barge market has been backwardated through much of December, with prompt loading dates continuing to trade at a significant premium to material loading further forward.
Early Tuesday, traders reported prompt loading material being offered at a premium of as high as $32/mt to January gasoil futures, with buying interest reported at around a premium of $28/mt.
Is this available in English?
I read this 3 times and still don’t have a clue what it says.
The only part I understood was, “ we danced the lightcrude
contango...”.
Also backwardated left me bewildered.
Europe is using a lot of diesel, they have also increased their standards for ultra low sulfur diesel. This limits the amount of refineries around world that can meet this new standard, like the US did in 2006.
In spite of the high US diesel prices, some US refineries are finding it more profitable to ship diesel from the US to Europe, and they still don’t have a sufficient supply.
That was what I took from the article combined with what I know and how I think it impacts the market, IMO.
some help with terms:
CONTANGO: prices in succeeding delivery months are progressively higher than in the nearest delivery month.
ULSD: Ultra Low Sulpher Diesel
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