Diesel prices fall sharply after Netherlands stock release

London (Platts)--14Sep2005

Outright European diesel prices and physical premiums to October IPE
gasoil futures have fallen sharply after IEA member nations released oil 
stocks to help deal with the oil supply disruptions in the aftermath of
Hurricane Katrina.

     The International Energy Agency (IEA), the West's energy watchdog, has
released 2 million barrels per day of crude and products to compensate for the
offshore production and refinery outages in the Gulf of Mexico after Hurricane
Katrina slammed into the Gulf Coast two weeks ago

    The Netherlands was one of the first countries to act following an appeal
by the International Energy Agency on Sep 2 to release 60-mil bbl of emergency
crude and products to help compensate production and refinery shortages in the
Gulf of Mexico. COVA, the Netherlands oil stocks organization issued a tender
to supply 102,000mt of 50ppm winter specification diesel from Sep 15 to Oct
14. The tender was heard to have been awarded on Sep 13 with 60,000t
originating from an Amsterdam terminal and the remaining 42,000t from smaller
oil terminals.  

    In the aftermath of Hurricane Katrina, diesel prices soared with 50ppm FOB
Amsterdam-Rotterdam-Antwerp barges assessed at an all-time record high of
$676.25/mt on Sep 1. This represented a premium to October IPE gasoil of
$24.25/mt. 50ppm barges were assessed last night by Platts at $589.75/mt,
representing a premium to October IPE gasoil of $14.5/mt. 

    In the case of the Netherlands, traders the arbitrage for diesel was not
economical for diesel due to higher freight rates boosted by the urgency to
move a large number of gasoline cargoes across the pond.

    Diesel stocks were likely to remain in the Benelux region with physical
premiums for 50ppm barges  likely to come under pressure. "This is going to
flood analready well supplied market with just more product," said one trader.
     "Whoever takes the tender does not have too many options. They are likely
to simply put the diesel in to tank and play the contango," added the trader.
     In the wake of Hurricane Katrina, the cost of moving 33,000mt of gasoline
from the Mediterranean to the US has firmed 70 points on Wednesday alone to
finish the day at a record high of Worldscale 500, Platts data showed Sep 8.

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