Europe Distillates-Gas oil crack widens to over $5

LONDON, July 15 (Reuters) -The gas oil crack strengthened on
Wednesday from five-year lows hit on Tuesday to over $5 on the
back of expectations for further refinery run cuts.

Gas oil rose relative to crude despite news that U.S.
distillate stocks had risen by 600,000 barrels to a new 25-year
high of 159.3 million barrels. [EIA/S]

"The perception is that we are through the worst. But there
is a long way to go before the simple refiner is back in profit.
That (run cuts) is the only way to clear the distillate
overhang," a trader said.

ICE GAS OIL

* August ICE gas oil futures LGOc1 were trading $16.50
higher at $507.75 a tonne by 1612 GMT.

* The prompt contango between August and September was
little changed at $7.75 a tonne, down from $8 on Tuesday.

* The prompt crack widened to over $5.30 a barrel by 1612
GMT from $4.88 on Tuesday.

* But traders said that wider cracks would not necessarily
reduce the risk of further run cuts among simple refineries
where margins are still weak.

* Refinery utilisation rates were estimated at around 85
percent.

DIESEL

* Barges of 10ppm diesel were steady and traded at premiums
of between $10-$12 a tonne fob ARA to August gas oil futures.

* Cargoes were bid at a premium of $4 to the underlying
August gas oil contract.

* In the Mediterranean, cargoes with French specification
were discussed at premiums of between $7 and $14 a tonne cif NWE
to August gas oil.

GAS OIL

* Barges of gas oil with 0.1 percent sulphur traded at
discounts of between $7 and $9 a tonne fob ARA to August gas
oil.

JET FUEL

* Jet fuel barges fell by around $3 to trade at August plus
$30 and $33 a tonne as some traders estimated that buying for
the August holiday season had already peaked.

* The August/September contango on the swaps market widened
to $2.25 from $1.50 on Tuesday, leaving August at a $46.50
premium to gas oil futures.

* "We heard that banks were selling swaps on behalf of
airlines and they were selling liquidity. Our conclusion is that
they needed to sell because consumption is so low that they are
unwinding positions," a trader said.
(Reporting by Emma Farge editing by Michael Kahn)