Europe Gasoline/Naphtha-Sandy weighs on gasoline, margins low

Tue Oct 30, 2012 5:21pm GMT

LONDON, Oct 30 (Reuters) - Prompt gasoline margins in
northwest Europe continued to dwindle between $2-$3 a barrel on
Tuesday, as traders expected Hurricane Sandy to weigh on product
demand, while supply in the region was expected to rise as
refineries returned from maintenance. 
    By Tuesday afternoon, demand destruction in the aftermath of
the storm had become the new focus of product markets as roads,
homes and businesses remained flooded, while some refineries
were already restarting. 
    Adding to bearish sentiment in gasoline caused by Hurricane
Sandy, Mediterranean demand was weaker than usual as Algeria's
Skikda refinery has returned from maintenance and state firm
Sonatrach was not seen to be in the market for November cargoes.
    Despite a slow gasoline market, rising propane prices were
supporting naphtha, traders said, as the two feedstocks can be
used as substitutes by some petrochemical firms and the latter
remains the cheaper option.
    A propane trader said the propane/naphtha spread for cargoes
in northwest Europe was bid at around $108 a tonne for November.
    He said that a combination of supply problems including the
lack of cargoes from Iran due to complications arising from
European sanctions and low stocks resulting from steep
backwardation was pushing propane prices higher.
    Naphtha prices were also being supported by strong demand in
Asia, according to a naphtha trader, who said that Japan in
particular was helping to absorb excess cargoes in Europe, the
Mediterranean and the US.
    * There were no trades in the window, but some 15 barges
traded ahead of the slot at $935-$946 a tonne fob ARA, a wider
range than Monday's $940-$941 a tonne fob ARA.
    * Barges were trading at $0.50-$12 a tonne over the November
swap, a wider range than Monday's $1.50-$2.25 a tonne.
   * No barges of premium unleaded traded in the window either.
There were no bids, while offers were heard at $943 a tonne fob
ARA. None have traded in the afternoon slot for eight sessions.
    * No cargoes traded as Hurricane Sandy in the U.S. curbed
activity in gasoline cargo markets in northern Europe. In the
Mediterranean, Litasco offered a cargo at $923 a tonne fob Med. 
    * Brent crude futures were down 41 cents at $109.03
a barrel at 1643 GMT. 
    * Eurobob's crack to dated Brent BFO- was little changed
at $2.51 a barrel around the same time, about 15 cents above the
previous close.
    * November U.S. RBOB gasoline futures were down 1.30
percent at $2.7209 a gallon around the same time, trading in the
opposite direction to U.S. crude, which were marginally higher
on the day.
    * RBOB's crack to U.S. crude futures RB-CL1=R was trading
at $24.49 a barrel, in from $25.39 a barrel at the previous
    * In another busy session this week, four cargoes changed
hands during the window. Vitol bought three, one from each
Glencore, Gunvor and BP, while the fourth was sold by Glencore
to BP.
    * The deals were done at $936-$943 a tonne cif NWE, a
slightly lower range than Monday's $942-$944 a tonne cif NWE. 
    * "Most of the activity is happening in the window," said a
naphtha trader, commenting on the rise in activity during the
window over recent months.
    * The prompt naphtha crack spread edged up to around minus
$3.43 a barrel, up from minus $3.88 a barrel on Monday
afternoon, according to Reuters calculations.

 (Reporting by Jessica Donati; editing by William Hardy)

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