Outright prices for all middle distillates hit new lows in Europe Tuesday as ICE 0.1% gasoil futures fell to their lowest level since end of November 2010, following a continuing decline in the ICE Brent crude contract.
The ICE 0.1% gasoil futures October contract was assessed at $746/mt London 4:30 pm time Tuesday.
In the Wednesday morning trading session, the contract continued to fall, trading at $727/mt levels.
Crude oil futures, meanwhile, continued to test fresh multi-year lows Wednesday on further signs of weakening global oil demand and signals that OPEC is not ready to cut output to halt the sharp selloff.
Meanwhile, the contango structure on the forward 0.1% ICE gasoil futures has softened in the recent days and the November contract was seen trading just $1/mt below the December contract on Wednesday morning.
This follows an increase in high sulfur gasoil exports out of NWE and the Baltics towards the US East Coast and a closed diesel arbitrage from the US.
"With the contango we ended up building a lot stock, which is a lot to chew through but because the US feels so tight at the moment all of a sudden Europe's gasoil becomes the cheapest barrel to South America and even east coast US. So even if demand in Europe is limited it makes sense to start drawing down on those stocks. That and we are coming out of turnaround so we have had lower runs for September into October so less supply of product," said one trader.
Outright CIF Northwest European jet fuel prices fell $12.25/mt to $819.25/mt, their lowest since Dec 2, 2010, Platts data showed.
Outright prices for 10 ppm diesel reached similar lows, with FOB Rotterdam barges closing at $764.50/mt, CIF NWE cargoes at $773/mt and CIF Med cargoes at $774.75/mt.
0.1% gasoil outright prices followed the same trend, with FOB barges falling to $743.75, CIF NWE cargoes to $751/mt and CIF Med cargoes to $752/mt.
