ARA 50 ppm barges dip to 7-week low on ample supply, low demand

FOB Amsterdam-Rotterdam-Antwerp 50 ppm sulfur barges dipped, with low local demand facing higher supply levels, traders said.
The prompt market closed Tuesday at a premium of $16/mt over the ICE gasoil front-month futures contract, $4.25/mt lower day-on-day and more than $10/mt down on the week, according to Platts data.
Traders said that good margins for European refiners have led to an increase in output of distillates, with arbitrage cargoes from the US adding extra volume to the market.
The 50 ppm grade is the main product for the German market, the largest heating oil hub in Europe.
Demand in the region has significantly dropped back over the past three weeks after German end-users took advantage of lower outright prices in June and early July to stock up on product ahead of winter.
Demand in the region has been further hindered by low water levels on the Rhine River, Europe's major water way. When the water levels go down, barges cannot load at their full capacity which leads to higher freight rates to move the product along the system.
Source: Platts