The premium of ultra low sulfur diesel barges over 50 ppm gasoil barges has moved to its widest point since May 1, with ULSD trading at a $9.75/mt premium to 50 ppm, Platts data showed Monday.
Rising ULSD premiums in Northwest Europe have largely been responsible for the widening of the premium as a result of the current refinery maintenance season and run cuts throughout Europe on the back of refinery poor margins. By contrast, demand for 50 ppm gasoil has been low in recent weeks, said traders.
"ULSD demand in Europe is relatively stable and predictable. The demand is there but the supply is not and as there is no real 50 ppm demand, ULSD has gone up faster than 50 ppm," said a trader.
Notable Northwest European refinery turnarounds occurring in September are at Shell's Pernis and BP's Rotterdam refinery, both capable of processing 400,000 b/d of crude.
German wholesalers and consumers of heating oil in Germany have been particularly reluctant to restock amid high outright 0.1% ICE gasoil futures contract prices, according to traders.
The front-month 0.1% ICE contract has increased by 15.51% since hitting a year low of $822.25/mt on May 1 and closed at $949.75/mt on Friday, due to lower production in Libya and fears over the Syrian conflict.
However, some traders said German retailers will eventually need to restock ahead of the winter period.
The country has been experiencing below-average temperatures over the last few days, according to data from Customer Weather.
Temperatures in Berlin for the week ending September 13 were 2 degrees Celsius below the average, with expectations for temperatures of 3-4 degrees Celsius below the average for the week ending September 23.
