Badly Needed Rainfall Set to Revive European Diesel Demand
Europe's diesel market could soon get a boost as heavy rainfall is expected to bring badly needed relief to Rhine river water levels that have impeded barge traffic for months.
Demand for barges has risen sharply in recent days, according to brokers and traders, and cold weather that is set to hit the region could further spur demand for heating oil.
Low water levels along the river Rhine <WL-KAUB> and canals in Germany and Switzerland have severely impeded barge traffic since September, largely cutting off inland markets from the Amsterdam-Rotterdam-Antwerp (ARA) coastal storage and refining hub.
With water levels at near 10-year lows, tanker barge traffic in some regions came to a complete halt or was limited to 40 percent of loading capacity for extended periods of time, according to brokers.
But with forecasts for heavy rain over the coming days, Rhine water levels are expected to rise to above 2 metres from their current 60 centimetres, allowing barges to resume normal operations.
"Water levels on the Rhine are expected to rise above 2 metres early next week, barges will be able to fully load and that should translate into a significant increase of refined products shipments from ARA to the inland markets of Europe," Petromatrix, a consultancy based in Zug, Switzerland, said in a note.
"Temperatures in Europe will see a significant drop over the weekend, European traders will start next week in winter mode."
The supply disruption has forced Switzerland to release around 5 percent of its oil reserves in recent weeks.
Traders were able to mitigate the supply crunch by delivering products from ports in northern Germany to inland markets by rail and road.
(Reporting by Ron Bousso)
