Europe Distillates-Cold stokes hopes of more heating oil demand

LONDON, Feb 2 (Reuters) - European gasoil barge
differentials inched up on Thursday, as brokers cited some
demand emerging as the cold grip on the region continues.

"Demand is better but German traders are not as active as I
expected in ARA. There is still sufficient supply from refiners
inland Germany I understand," said a middle distillates broker.

Hopes are pinned on a longer-lasting cold snap, with
forecasters warning of colder weather in the UK, France, Norway
and the Iberian peninsula while warmer conditions could prevail
in the rest of Europe. See FACTBOX

"Forecasts are still for blistering cold, so demand must be
getting better and better. Consumers can't wait forever with
lows of minus 10 Celsius expected until the end of next week",
the broker added.

Despite the glimmer of hope, traders said consumers,
particularly in the German hub, were choosing to run down stocks
before tapping the market as prices remain high in euro terms.

On the supply front, weekly ARA gasoil stocks rose 4.8
percent 2.544 million tonnes from 2.427 million tonnes, Dutch
oil analyst Pieter Kulsen said, after the plunge in temperatures
in northwest Europe raised expectations demand for heating oil
would at last pick up.

The outlook for the middle of the barrel remains temperate,
however, according to analysts at Merrill Lynch led by Francisco
Blanch.

"Demand continues to be supported by emerging market growth
despite the weakness in Europe. Still, with upgrading capacity
expanding strongly, any immediate upward pressure on crack
spreads should be limited," they wrote in a note on Thursday.

GASOIL

* Brokers said eight gasoil barges traded in the window at
discounts to February ICE gasoil futures of between $1-$2 a
tonne fob ARA, firming slightly from the previous session's
discounts of $1-$2.50.

* Mabanaft was the main seller, while BP, NSG and Vitol were
among the buyers.

* One cargo of 50 ppm gasoil, the German specification
heating oil, traded at premiums over ICE gasoil of $15 a tonne.

* February ICE gasoil futures fell 0.79 percent to
$947.75 a tonne at 1710 GMT.

* The ICE gasoil crack LGO-LCO1=R was trading at $15.89 a
barrel, falling from a settle on Wednesday of $16.86 a barrel.

* The February/March contango LGO-1=R stood at $1.50 a
tonne, unchanged.

DIESEL ULSD10-BD-ARA

* Four diesel barges traded at premiums to ICE gasoil of
between $16.50-$17.00 a tonne fob ARA, softer than
Wednesday's$18 a tonne.

* In the Mediterranean market ERG bought a cargo of French
winter specification diesel from Stasco at a premium to March
ICE gasoil futures of $28 a tonne cif.

JET FUEL JET-BD-ARA

* There were no deals on the jet barge window, traders said.
Bids came in at premiums to ICE gasoil of $61 a tonne fob ARA
and there were no offers. On Wednesday, one deal was completed
at a premium of $63 a tonne.

* "Demand is not strong and I think there is a bit of
uncertainty on direction at the moment", a broker said.

* There were no cargo trades.

FUEL OIL

* Barges of low-sulphur fuel oil (LSFO) with 1 percent
sulphur traded at $676-$677 a tonne fob ARA, weaker from the
previous day's $679-$682.

* Barges of high-sulphur fuel oil (HSFO) with 3.5 percent
sulphur content traded at $657.50-$665.00 a tonne fob ARA,
falling from Wednesday's $666-$675.25.

* "We do not expect Atlantic Basin residual fuel oil margins
to strengthen as CDU capacity growth outweighs upgrading
capacity," the BofAML oil analysts said.

(Reporting by Zaida Espana; editing by James Jukwey)