Europe Distillates/Fuel Oil-Contango boosts storage demand

LONDON, Nov 27 (Reuters) - Widening contango on the forward
curve of ICE gas oil futures boosted floating storage demand in
Europe, traders said on Friday.

The cargo market in the region was well bid especially for
diesel as the arbitrage imports opportunities from the United
States have become very thin this week and the bidders were
likely to put the fuel into floating storage, they said.

"People buy it store on a vessel as contango makes good
money for them. So there is little on offer," one trader said.

DIESEL

* In the public trading window, six bids were made while
there was only one offer for the UK spec at a $24 premium a
tonne cif to December ICE gas oil futures in Northwest Europe.

* Bids were around a $21 premium for the French winter spec
and a $24 premium for the UK spec.

* In the Mediterranean, Eni continued to bid at December
futures plus $20 a tonne cif, while one offer was made at the
benchmark plus $22.

GAS OIL

* Dealing was more active in the Mediterranean than the
northwest. One cargo traded at parity to the spot quote a tonne
cif MED. Bids were around plus $8 for 0.1 percent sulphur and
plus $6.50 for 0.2 percent.

* Barge swaps were at discounts of $9/$10 a tonne fob ARA to
ICE gas oil futures.

* East/West spreads remained positive for December for the
the third day, suggesting the spot arbitrage from Asia was
likely to be closed for the month.

* The spreads were $3/$4 for December and minus $2/$3 for
January.

ICE GAS OIL

* By 1731 GMT, gas oil futures were trading at $609.25 a
tonne, having hit $580.00 earlier, the lowest since Oct. 12.

* The contango to January was around $11.50 a tonne,
unchanged from Thursday's close. LGO-1=R

* The prompt crack was around $6.07 a barrel. LGO-LCO1=R

RHINE WATER LEVEL

* The water levels of River Rhine have risen and shipping
can return to normal, after having being forced to sail
partly-loaded. [ID:nGEE5AP0SB]

* In theory, this could support the barge market, but
oversupply of gas oil may offset it for that product.

JET FUEL

* Premiums were slightly lower, with Statoil selling a barge
to BP at December plus $52 a tonne fob ARA.

* BP sold 30,000 tonnes to Vitol at the spot average minus
$4 a tonne cif, after 57,000 tonnes trading the same companies
on Thursday.

* Swaps were little changed across the curve, with December
and January flat at $56/$57 a tonne cif.

FUEL OIL <EURO/DIFF/FO>

* High sulphur fuel oil (HSFO) barges with 3.5 percent
sulphur traded at $439-$443 a tonne fob ARA, down from
$446.75-$449 at Thursday's close.

* HSFO's crack widened by about 60 cents to minus $6.17 a
barrel.

REFINERY RUNS [REF/OUT]

* Refinery operation rates are likely to average around 80
percent in December, holiday below about 90 percent in December.

(Reporting by Ikuko Kurahone)
((ikuko.kurahone@thomsonreuters.com; +44(0)20 7542 8145;
Reuters Messaging: ikuko.kao.reuters.com@reuters.net))

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