Heating fuel grades of gasoil in Northwest Europe saw price differentials weaken further Friday to reach multi-month lows as the supply overhang pressures market fundamentals.
S&P Global assessed FOB Amsterdam-Rotterdam-Antwerp 50 ppm gasoil barges at a 19-month low to low sulfur gasoil futures of minus $13.75/mt Friday, down 75 cents on the day and the lowest level since February 16, 2016, when the discount reached $14/mt.
Germany is a major consumer of this grade of gasoil and demand there has been limited, according to market sources.
In other heating fuel markets, France and Switzerland import 0.1% gasoil, with pricing differentials also falling on account of a lack of demand from these consumer markets.
Platts assessed CIF NWE 0.1% gasoil cargoes at a 22-month low Friday of a $21/mt discount to low sulfur gasoil futures, down 25 cents/mt on the day.
Recent sell-offs of distillate products from storage tanks in the region have contributed to the supply overhang, market sources said.
Despite this market-wide selling, however, outright prices remain too high to attract buying interest, one broker said.
The backwardated prompt market structure across distillate products has meant that it is no longer lucrative to keep product in storage, resulting in these sell-offs over the last few months, sources said.
The October/November ICE low sulfur gasoil futures spread was last assessed at a $4.25/mt backwardation Friday, down 75 cents/mt on the day.
