South Germany product oversupply dampens price rise

Oil product oversupply in southern Germany lessened the effects of price rises last week, and sales surged.

Concerns about storm damage in the Caribbean and declining US stocks led to a rise in prices for crude and gasoil, which were reflected in German prices for heating oil, diesel and gasoline. But Miro's 310,000 b/d Karlsruhe and Bayernoil's 215,000 b/d Neustadt-Vohburg refineries have been oversupplied since the start of the month because flooding prevented buyers from collecting.

The rise in gasoil futures as prices in the south and southwest remained comparatively low, which prompted many market participants to stock up on middle distillates. Volumes for heating oil and diesel submitted to Argus reached their highest since mid-June on 2 July. Demand has been declining since then, and the oversupply is decreasing.

Unfavourable weather conditions have delayed a continued, nationwide increase in diesel demand from agriculture, which is weighing on the need for additional imports into northern Germany. Domestic refineries are running at high capacity and an increasing supply of imported diesel in northwest Europe is keeping the cif Hamburg cargo premium at a consistently low level.

By Johannes Guhlke