A closed arbitrage from other regions and refinery shutdowns have tightened the Mediterranean diesel market driving cargo premiums to ICE gasoil futures to their highest since August 2015.
"It's almost impossible to find cargoes for the first half of May in the Mediterranean," one trader active in the region said.
"Arbitrage from the U.S. (into the Mediterranean) is not really working, or just working on a 10-minute basis so nobody is able to fix cargoes," he added.
As a result, delivered Mediterranean diesel cargo premiums to the ICE May gasoil low-sulphur futures contract <DL-CIF-MED> rose to $11 a tonne on Thursday, their highest since August 2015.
"The Mediterranean is very strong, but very little is pointing towards the region arbitrage-wise," another trader said.
A relatively strong diesel market in Asia is also depriving the Mediterranean market from regular arbitrage flows from the Middle East and Asia Pacific, a third trader said.
In the Platts trading window on Thursday eight bids emerged from potential buyers of diesel cargoes for delivery at various locations in the Mediterranean. Those eight bids were met with a single offer from Vitol. On Wednesday, the bid to offer ratio during the afternoon trading window was seven to one.
Regional refinery maintenances in Spain, Israel, Algeria and elsewhere were also keeping supplies tight, traders said.
At the same time, firm demand was being observed into Italy and Turkey, traders said.
Tightness in the Mediterranean contrasts with a more balanced market in northwest Europe, where imports from other regions continue.
In late April, northwest Europe was able to attract at least two rare cargoes from the U.S. Atlantic Coast.
In the past week, gasoil inventories in the Amsterdam-Rotterdam-Antwerp hub jumped more than 8 percent to their highest since September at around 3.34 million tonnes.
By Ahmad Ghaddar