German demand for heating oil, diesel and E5 gasoline increased in the week to 29 November, supported by a fall in domestic prices. The switch to winter grades and low stocks further boosted fuel demand.
Middle distillates traded at lower prices nationwide last week, with heating oil and diesel prices falling by around €0.60/100 litres compared with the previous week. The drop was in line with a decline in the value of Ice gasoil futures, which came under pressure from the prospect of US tariffs against Canada, China and Mexico indicated by president-elect Donald Trump.
Oversupply from refineries in the south and west of Germany put further downward pressure on domestic prices last week. Suppliers offered heating oil, diesel and gasoline from Bayernoil's 215,000 b/d Neustadt-Vohburg complex, Miro's 310,000 b/d Karlsruhe refinery and Shell's 334,000 b/d Rhineland complex at lower prices than surrounding loading locations in order to fulfil their contractual offtake volumes by the end of the month.
The switch to winter grades supported German fuel demand last week. Consumers ordered smaller quantities of diesel in recent weeks as they waited for the switch to winter specification grades before replenishing their stocks. Since the switch, traded diesel spot volumes reported to Argus have steadily risen. An anticipated €10/t rise in Germany's CO2 tax next year will likely lead to increased stockpiling of product from mid-December, according to traders.
End-consumer tank levels for diesel were at just 52pc at the end of last week. The extent to which the increase in the CO2 tax will put pressure on diesel imports depends on whether German refineries can maintain current high throughput levels. For the time being, imports into Germany via the country's northern ports or along the Rhine are not feasible because of the comparatively low domestic prices.
