German heating oil sales drop as prices rise

Traded heating oil volumes in Germany dropped sharply in the week ending 16 August after a first price rise since early July.

Although prices only increased by €0.70/100l on the week, heating oil spot sales submitted to Argus fell by 40pc.

Ice gasoil futures have been rising since 7 August as Europe-wide demand for heating oil picks up towards the end of summer. Diesel demand in the Amsterdam-Rotterdam-Antwerp (ARA) hub has been increasing as some German importers reduced stocks as a result of short-term price-driven demand in the week to 9 August.

Import demand along the Rhine river decreased compared with the week prior, but fuel imports remain slightly elevated. Some traders are concerned about a drop in Rhine water levels in September, so are using the lower prices to replenish their stocks. Ship owners report a consistently higher utilisation in August than in July.

The key factor for price movements of middle distillates in recent weeks was the Ice gasoil futures contract, which has fallen by almost $100/t since the beginning of July. German average heating oil prices fell by almost €6/100l during the same period. The price drop promoted a steadily increasing spot demand for heating oil, as consumers usually replenish stocks at a time of low prices.

By Johannes Guhlke