By mid-August it appeared that diesel supplies to the Amsterdam-Rotterdam- Antwerp (ARA), the trading hub of north-western Europe, were significantly delayed. According to the Argus, the ARA region experienced a lack of sufficient diesel and gasoil in August, confirming traders' forecasts of a limited supply of these fuels for the month.
Based on data from Vortexa, only one Handysize tanker arrived in the ARA region with gasoil in the first six days of August. Arrival volumes were low, at around 75,000 tonnes of gasoil, including low-sulphur diesel. This is sifnificantly less than the average arrival volume during the first seven months of the year, which amounted to 54,000 tons per day or 1.65 million tons per month.
Forecasts indicate that only another 520,000 tons of gasoil may arrive at ARA in August. Traders point out that Europe could face a fuel deficit as trading flows revert to eastern and western directions. Buyers are finding it difficult to find enough sellers, as they are limited by volume. Even if supplies from the US or the east become more available, it is likely that fuel will not reach Europe until late August or early September.
As a result of this volume shortage, diesel fuel prices in Europe have risen. Last week, premiums for North Sea dated crude oil reached a record $35.73 per barrel, the highest level since the beginning of the year, before the EU imposed a ban on Russian products.
It is noted that ICE European gasoil futures traded at a premium of $24.36 per tonne on average over Singapore gasoil swaps in the first month of trading. This indicates that the arbitrage economics on the "east-west" route has become less favourable compared to the previous period. The price of ICE gasoil is influenced by the cost in the Singapore region, which has faced restrictions on Russian products.
It is expected that diesel supplies to Europe may remain limited after August. Considering the anticipated challenging maintenance schedules at refineries in the Middle East and India during the autumn, this could lead to an increase in market deficit. Meanwhile, European refineries also plan to undertake seasonal maintenance that could affect production volumes.
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