European refining margins have been falling as the middle distillate complex's prices relative to crude drop, sources said Tuesday.
Diesel's value compared with crude or crack fell $0.03 to close to a five-month low Monday, to be assessed at plus $15.07/barrel, and has fallen $1.69 since February 20, Platts data showed.
"Middle distillate cracks, have been going in a downward direction" a Northwest European refiner said, adding that "when the outright price climbs rapidly, driven by crude, cracks do not move at the same rate."
The 0.1% gasoil FOB Rotterdam barge crack reached an over four-month low on Monday, assessed at plus $12.62/b. The last time the crack was lower than that was on October 12, 2011 when it was assessed at plus $11.89/b, Platts data shows.
Gasoil prices have also been under downward pressure as demand waned over the past two weeks as mild temperatures have reduced buying.
The jet barge crack reached a five-month low on February 16, Platts data shows, when it was assessed at plus $13.02/b, and was assessed plus $13.19/b Monday.
As the value of middle distillates compared with crude falls there is a "general pressure on people to start to look at cutting runs" a trader said, while other sources said there had been a trend to increase the refinery feedstock to crude run ratio.
The high outright price has been affecting end user demand in addition to pushing down cracks.
The outright price of FOB Rotterdam ULSD hit a nine-month high Thursday, of $1049.25 mt, and was assessed only $3.50 lower on Monday, Platts data showed.
The outright price for CIF NWE jet fuel cargoes reached an almost ten-month high Monday when it was assessed at $1100/mt. This is the highest since May 4, 2011, when it was assessed at the same value.
Benchmark Brent crude futures have been supported by political tensions in the Middle East and at least one VLCC of crude exported to Asia in March, sources said.
