European sulfur free gasoline barges have traded to a five month high on strong European and US demand and major refinery turnarounds, traders said Wednesday.

In early trade Wednesday, barges in the hub of Amsterdam-Rotterdam-Antwerp hit $608/mt, an overnight climb of $16.6/mt, Platts data showed. Gasoline barges have not been assessed by Platts above $600/mt since October 13, 2005. A combination of refinery outages and demand into Europe and the US has seen gasoline barge values firm dramatically, climbing nearly $90/mt in just one week, according to Platts data. In Europe, BP proved a significant buyer of gasoline cargoes into the UK and a significant buyer of gasoline barges in the ARA region with their 163,400b/d Coryton refinery in the UK closed for scheduled maintenance.

On April 1, European markets switch to using summer fuels. Winter grade gasoline has been in limited supply in Europe as refineries have switched to the production of summer fuel.

Refiners, who require winter grade gasoline up until the deadline, have been keen to produce summer grade gasoline, which can be stored in tanks ahead of the peak summer demand, and buy back their winter retail requirements from the barge market.

"It makes total sense for a refiner to produce summer grade and buy winter barrels from barges," one trader said. "This has strengthened winter prices to the point that they are on parity with summer." US demand has also picked up as the region starts to draw European gasoline with major US refineries down for maintenance, with strengthening demand in the US for both non-oxygenated and oxygenated gasoline.

"The arbitrage to the US is improving and if you have clean, summer grade fuels you will definitely have no problem seeling them in the US," one trader said.

The renewed buying interest from the US was not seen a signal that the driving season had started, traders said. "This spike is dramatic but I think it will be short-lived," one trader said. "Stocks are high in the US and once refinery turnaround season is over this buying will dry up," the trader added.

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