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Europe Gasoline/Naphtha-Weak demand weighs

Tue, 24th Apr 2012 19:14

LONDON, April 24 (Reuters) - Gasoline barge prices were

mixed on Tuesday,
with premium unleaded barges tumbling some $20

a tonne as weak demand continued to weigh, whilst benchmark

Eurobob prices improved slightly as the day wore on but did not

trade in the window.

In the morning, Eurobob barges traded at some $1,092-$1,094

a tonne fob ARA, at premiums to the May swap of $6 to $9 a


The narrowing premium reflected the fact that the end of

April is approaching, so prices tend to converge with the swap,

but traders added that weak demand was dogging the market.

The arbitrage to the United States was effectively closed as

freight costs were almost double the cents per gallon spread

between Eurobob and U.S. RBOB gasoline.

'It's okay for a refiner, but I can't find a blend margin,'

said one gasoline trader.

Aside from naphtha, which is little use for blending into

the higher quality grades used in northwest Europe and the

United States, gasoline components remained expensive.

'Some regions are not pulling as much as before, so some

cargoes have gone to the U.S., but I would not say the arbitrage

is open,' another gasoline trader confirmed.

The market is also being hit by refineries returning from

seasonal maintenance ready to pump more gasoline to meet demand

in the forthcoming U.S. summer driving season.

'There is so much product around, no one wants to buy it

up,' said a gasoline barge broker.

Traders are also eyeing talks between private equity firm

Carlyle Group and Sunoco for a potential joint venture to run

the 335,000 barrel-per-day Philadelphia refinery on the U.S.

East Coast.

The threatened closure of the plant this summer, along with

several other East Coast refineries, had raised hopes of a

better summer driving season for European traders and refiners.

Back in the UK, the future of Petroplus's Coryton refinery

will be decided by the middle of May when the current deal

supplying it with crude runs out, the administrator said .


* No barges of benchmark Eurobob traded in the window.

* Some 11,000 tonnes traded ahead of the window at

$1,092-$1,100 a tonne fob ARA, an improvement on Monday's

$1,078-$1,096 a tonne range.

* Morgan Stanley, Trafigura and Chevron were sellers, whilst

North Sea Group, Gunvor, Litasco, Mercuria, Cargill and BP were

on the buy side.

* By 1552 GMT, Eurobob's crack to dated Brent had

recovered slightly to around $13.19 a barrel from around $12.33

a barrel around the same time on Monday.

* Only one barge of premium unleaded traded, with Northville

selling to Total at $1,097 a tonne fob ARA, down from Friday's

trades at $1,127 a tonne.

* ICE Brent crude futures were down 51 cents to

$118.20 a barrel at 1556 GMT.

* May U.S. RBOB gasoline futures in New York were

down 1.09 percent at $3.1525 a gallon around the same time.

* RBOB's crack to U.S. crude futures was trading

at $27.46 a barrel, down from $28.40 a barrel around the same

time on Monday.


* No cargoes traded in the physical naphtha window, but

there were one bid and two offers. Vitol bid at $1,009 a tonne

cif NWE, whilst offers came from Trafigura at $1,007 a tonne and

Gunvor at $1,010 a tonne.

* The bid and offers came in different windows, so no

matches could be made, a trader said.

* The bid-offer range was up from Monday's trade at $1,000 a

tonne cif NWE.

* A broker said the naphtha market was pretty thin, with a

lack of demand from either petrochemicals or for blending.

* This is because propane has cheapened even further and is

now trading at a discount to naphtha of some $133 a tonne,

deterring buying of naphtha by petrochemical end-users.

* Also the gasoline/naphtha spread has come off from

plus-$100 levels to around $82 a tonne, making blending less


* 'Any strength will come from possible arbitrage

opportunities East,' the broker said, but added that the

East/West spread was only being discussed at around $5.

(Reporting by Claire Milhench, editing by Jane Baird)

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