Low water levels on the river Rhine are tightening oil product supply in western Germany by restricting barge deliveries from the Amsterdam-Rotterdam-Antwerp (ARA) hub and cutting off some inland tank farms.
Water levels at the key bottleneck near Kaub fell below 0.3m last week. At this level, most barges cannot pass, limiting deliveries from ARA to tank farms along the Upper Rhine and the Main. Traders said last week that oil product supply along the Rhine had become scarce.
Motor fuel supply is particularly tight. Germany is typically a net exporter of gasoline, but Rhine restrictions are also limiting movements of blending components needed for gasoline production. This is adding to pressure on finished product availability in inland markets.
The restrictions are also creating a regional price split. Suppliers at the Miro consortium's 310,000 b/d Karlsruhe refinery in southwestern Germany are facing rising oversupply, because the refinery usually loads some product on barges for delivery either upstream to Switzerland or downstream towards ARA. Both routes are currently constrained.
Sellers in western Germany are raising prices in response to scarce supply, while sellers around Karlsruhe are cutting prices to clear trapped volumes, widening regional price differentials within Germany.
Heating oil demand remains subdued, limiting some of the wider impact. Traders reported almost 40pc fewer traded heating oil volumes in July than in June, after higher national prices curbed buying. Ice gasoil futures rose in early July following a flare-up in US-Iran hostilities.
Despite weaker spot trade, privately owned heating oil tank fill levels have risen slightly. Stocks reached a national average of 46.8pc on 30 July, up by 2.3 percentage points from a historic low on 17 May, Argus MDX data show.
Warm weather is reducing heating oil consumption, but households are still putting more product into tanks than they are withdrawing, allowing stocks to recover gradually.