A tightness in the supply of 0.1% gasoil cargoes in the Northwest European market saw the price rise above that of the Mediterranean Wednesday for the first time since June 9, according to Platts data.
Platts assessed CIF NWE cargoes at a flat price of $982/mt, a premium of $9.25/mt over the front month ICE gasoil contract.
The Mediterranean was assessed at $980.75/mt, or a premium of $8/mt.
Strength in the Mediterranean market saw the two regions invert on June 10, when Mediterranean prices rose $1.25/mt above NWE as buying in the region far outstripped supply.
With demand remaining steady in the region, the Med peaked at $11.50/mt over the north on June 28, then maintained a healthy premium to NWE prices through July and August.
For the NWE market, there has been little appetite locally for 0.1% gasoil cargoes as the mainstay German market, which once accounted for over 80% of NWE's gasoil demand, has moved away from the high sulfur grade and towards lower sulfur 50 ppm heating oil.
Much of that supply is provided from German refining capacity or sourced from the Amsterdam-Rotterdam-Antwerp trading hub, leaving the 0.1% flows that originate in the Baltics having to find new markets.
A significant portion of the NWE supply has been moving out of the region as arbitrage opportunities cater for demand in such locations as North and South America, West Africa and the Mediterranean.
But as Europe moves into the typical heating oil season, those NWE customers who still need the standard 10,000 mt cargo size of 0.1% have found supply harder to source, traders said.
"Obviously there are areas that still need it, but who makes these cargo sizes now?" one trader said, as the arbitrage economics favor moving oil on larger vessels.
Meanwhile, with the Mediterranean pricing so strongly relative to the north, it has attracted supply to the region, bolstering supply, despite the persistent demand.
That has seen Med premiums slipping back, with Wednesday's premium of $8/mt over the September ICE gasoil contract down $1.50/mt day on day, while the NWE premium of plus $9.25/mt represented a rise of $2/mt over the same period.
