Diesel Demand Jumps In Mediterranean, Prices Rise
Demand for diesel in the Mediterranean has jumped and refiners in Greece, Italy and Turkey have bought at least 150,000 tons of the refined product, traders said on Wednesday.
"Prices are in line with demand. High, high," a distillates trader said.
In addition, Algeria has bought three cargoes of gasoil, equivalent to around 90,000 tons of product, providing an extra boost to distillate prices, he said.
The rise in prices is narrowing the opportunity for arbitrage from the United States and resulting in a slowdown in imports, which is contributing to a tighter system in the region.
Mediterranean diesel prices are close to $7 a ton above markets in North West Europe (NWE) and are trading at around $44 a ton over gasoil futures.
That said, the premium has narrowed in the aftermath of the International Energy Agency's (IEA) emergency release as prices in the NWE region have recovered after an initial slump. Last week the Mediterranean premium went as high as $12 a ton, traders said.
The diesel volumes bought were for delivery in the first half of the month, traders said.
Turkish refiner Tupras had sought around 60,000 tons of diesel, or two cargoes. One of these had been bought from BP, industry sources said.
A separate tender for the purchase of 60,000 tons of diesel for delivery early this month had been offered by Italy-based Kuwait Petroleum Italia and awarded to Glencore and Cargill, according to traders.
And early this week, Greece's Hellenic was said to have awarded a tender for some 30,000 tons of diesel. The winner remained unclear, although one source said it may have been Vitol.
