(Adds new gasoline stocks data in paragraph 7)
By Noah Browning
LONDON, July 2 (Reuters) - With more cars taking to the
roads as coronavirus lockdowns ease, demand for lighter, sweeter
oil more suitable for refining into gasoline is ticking up.
European refiners especially are moving away from sour
varieties like Russian Urals, which have risen in price since a
supply cut pact by producer countries made the grades scarcer,
towards alternatives such as U.S. West Texas Intermediate (WTI),
West African grades, CPC Blend and Azeri oil.
"Many discounted barrels from the U.S. are arriving in
Northwest Europe," one European importer of both Nigerian and
U.S. oil said.
"Demand is increasing from a bottom in April, and in July
and August demand should be higher," they added.
Although gasoline stocks in northwest Europe remain not far
from all-time highs and refining margins are still in the
doldrums, they fell by almost 9% in the week to Thursday in the
third consecutive weekly drop. The bargain price of lighter, sweeter crude is hard to
refuse. "Refiners are switching to sweet. And the arbitrage is open,
so WTI is being offered in the Mediterranean and Asia with
(strong) demand," another trader said.
Nigeria in particular hopes that slow sales brought on by
volatility and long transit times to key markets will soon end.
Mele Kyari, head of the Nigerian National Petroleum
Corporation, said in June that the country's oil would be the
"grade of choice" with the rise in consumption being driven by
gasoline-rich crude.
Still, flows from West Africa's top oil exporter to Europe
have been the lowest in two years, according to Refinitiv Eikon
data, while volumes of cheaper U.S. light oil hover near
all-time highs. But with WTI prices firming in Europe to around $1 above
dated Brent, Nigerian grades at around the same price are coming
into play, traders said.
Meanwhile, CPC Blend is expected to sell at a premium to
dated Brent with traders expecting a reduction in export
volumes.
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Northwest European gasoline stocks https://tmsnrt.rs/2YNrZIL
European gasoline refining margins https://tmsnrt.rs/2CZGh0F
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