Asia, Middle East ramp up diesel exports to Europe in October

 

SINGAPORE/LONDON, Oct 19 (Reuters) - Oil traders are ramping up diesel exports from Asia and the Middle East to Europe in October to profit from a wide price gap between the regions as weeks-long strikes at French refineries have tightened stocks, although a steep backwardation may cap volumes, according to trade sources and shipping data.

The price spread between front-month Singapore 10 ppm sulphur gasoil swaps and the ICE low sulphur gasoil futures contract, also known as exchange of futures for swaps (EFS) , was close to minus $150 a tonne on Wednesday, versus minus $29 a year ago, data on Refinitiv Eikon showed, making it attractive for traders to send oil to Europe.

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"East of Suez is sending everything they can ship... it's just a question of how much China exports in November," a Europe-based trader said.

EFS differential

For October, around 289,000 tonnes of gasoil will be loaded from South Korea and China to northwest Europe, up from 137,500 tonnes in September, ship tracking data from Refinitiv showed.

Exports from India and the Middle East for October to northwest Europe were at around 480,000 tonnes and 834,000 tonnes respectively, compared with 361,000 tonnes and 511,310 tonnes a month ago, the data showed.

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The trader estimated that Europe may import about 3 million tonnes (750,000-850,000 barrels per day) from east of Suez in November, of which the Middle East could account for two-third of the volume. Traders expect the bulk of supplies to Europe to come from India and the Middle East, on shorter shipping times.

Asia's top fuel exporters in South Korea and Taiwan have issued a flurry of spot tenders this month, while China will also step up diesel exports after Beijing increased allocation.