Europe Distillates-Cold snap supports ICE gasoil rally

LONDON, Feb 6 (Reuters) - ICE gasoil futures rose on
Monday, rallying to intra-day highs not seen since last November
with traders citing timid demand as a cold snap gripped Europe.

Temperatures have plunged throughout the continent with ice
blocking the river Danube in south Germany to inland waterways
shipping although vessels on the Rhine were operating normally,
a spokesman for Germany's inland navigation authority said.

The bitterly cold weather has also frozen a series of
smaller German canals, although icebreakers were keeping ocean
ports operational.

Analysts expect to see some improvement in demand during the
coming weeks but traders said that only a protracted period of
below-average temperatures would help lift physical prices
further as consumers feeling the pinch run down existing stock.

"European demand for winter fuel is expected to have picked
up last week following the arrival of the cold snap, finally
putting an end to what has otherwise been a balmy winter,"
Barclays analyst Amrita Sen said in a note.

GASOIL

* Trading volumes in the gasoil barge window doubled on
Monday, with 10 barges trading at February ICE gasoil futures.
The premiums were erased in a session when the ICE gasoil
February future rallied by 2.61 percent to $984.50 per
tonne.

* The February contract rose to intra-day highs of $988.75 a
tonne earlier in the session, levels not seen since the middle
of November.

* One barge of 50 ppm gasoil, the German specification
heating oil, traded at premiums over ICE gasoil of $16 a tonne.

* The ICE gasoil crack LGO-LCO1=R was trading at $16.70 a
barrel by 1703 GMT, trading at intra-day highs of $17.08 a
barrel and rallying from a close last Friday of $14.38 a barrel.

* The February/March contracts LGO-1=R were trading in a
backwardation $1.25 a tonne amid stronger demand for the current
month contract because of the cold snap, compared with last
Friday's contango of $1.75.

DIESEL ULSD10-BD-ARA

* Four diesel barges traded at premiums to ICE gasoil of
between $20-$22 a tonne fob ARA from last Friday's $20 a tonne
fob ARA, although brokers indicated demand could be weaker due
to the icy conditions on the road.

JET FUEL JET-BD-ARA

* Two barges of jet fuel traded in the window on Monday at
premiums over ICE gasoil March futures of $59 a tonne. Last
Friday, barges traded at $62-$63 a tonne over February ICE.

* On the cargo fronts, there were no deals.

* The industry faces a challenging time, with air freight
traffic at European airports declining during the second half of
2011 to end flat year-on-year in December, industry data showed
last week, confirming a slow-down in the continent's economic
activity.

* Airports body ACI Europe said passenger numbers rose by
8.3 percent in December compared with a year earlier, but said
it was pessimistic about the prospects for 2012.

* Weather disruptions forced London's Heathrow airport to
cut around half of the 1,300 flights programmed for Sunday.

FUEL OIL

* Traders said Asian fuel oil demand is expected to remain
strong, particularly from Chinese teapot refiners, so called
because of their relatively small size.

* The expected loss of fuel-rich Iranian crude has lent
support to the bottom of the barrel as well, traders said.

* The price of low-sulphur fuel oil (LSFO) barges with 1
percent sulphur rose to trade at $704-$707 a tonne fob ARA in
the window, firmer from Friday's $687 a tonne.

* Barges of high-sulphur fuel oil (HSFO) with 3.5 percent
sulphur content also jumped, trading in the window at
$682.25-$688.00 a tonne fob ARA, from the previous session's
$659-$664.50 a tonne.

(Reporting by Zaida Espana; editing by Jason Neely)