The European diesel market is tightening faster than usual as workers’ strikes at French refineries choke off supplies.
The continent’s diesel sector — which tightens during the heating season — has been on edge since the invasion of Ukraine, with traders already shunning Russian barrels. That’s now being exacerbated by French industrial action curbing fuel output just as routine maintenance starts at oil-processing facilities across Europe.
Europe’s diesel market has surged this week as worries about near-term availability mount. The contract closest to expiry is now more than $90 a ton above November futures, with the gap shooting up to the biggest since July. Futures have rallied to the equivalent of about $150 a barrel.
The strikes add pressure to Europe’s diesel and heating oil market, which has been left short by the loss of Russian supply. The action has seen filling stations in parts of France start to run out of fuel — another headache for consumers and industries hit by a cost-of-living crisis and the worst energy crunch in decades.
Oil trader Gunvor Group’s Chief Executive Officer Torbjorn Tornqvist said Tuesday that the diesel market is moving toward levels of tightness that were seen in the weeks after the invasion of Ukraine.
The French outages “come at exactly the wrong time for Europe’s energy security, as they risk accelerating product stockdraws ahead of the looming embargo on imports of Russian products,” Facts Global Energy said in a note Tuesday.
France is an important fuel supplier, able to process more than 1 million barrels of crude a day. The strikes have affected about two-thirds of the nation’s capacity. The two biggest refineries — the Normandy plant operated by TotalEnergies SE and Exxon Mobil Corp.’s Gravenchon — are operating below capacity.
Published at Thu, 06 Oct 2022 02:05:16 -0700