Royal Dutch Shell Plc is attempting to restart one of two crude units at Europe’s biggest oil refinery that were halted by a fire late last month.
European diesel prices slumped as traders anticipated more fuel supply.
Shell is trying to restart a crude distillation unit at the Pernis refinery in Rotterdam.
A Shell spokesperson said: “Shell Pernis shut down most of its units on July 30 due to a power outage
We are currently restarting a number of units as part of the phased restart of the full complex. Complete restart will take place in a structured and controlled way. Flaring and noise will be part of recommissioning. We will do our utmost to minimize impact for residents.
We regret the impact this may cause for our customers, and we are working hard to minimize impact.”
Diesel futures extended their decline by as much as 0.9 percent in less than an hour after the planned restart became known, and were trading at $480 a metric ton at 12:27 p.m. in London, ICE Futures Europe data showed.
Fuel prices in both Europe and the US jumped at the end of last month when the fire forced Shell to halt most of the plant’s units.
Traders directed extra cargoes from other parts of the world in anticipation of a supply shortfall in north west Europe. The difference between diesel and crude declined immediately after the planned restart became known, a sign of a weaker market.
Steve Sawyer, a London-based analyst at FGE, talking about fuels like gasoil, diesel and jet fuel, said: ““I would expect distillate cracks to come off quite a bit in the next few weeks purely as a reaction to Pernis coming back.
“They may weaken for the rest of August and September, until refineries start to go into maintenance in October.”
Diesel imports from the US were poised to reach a 12-week high, according to a survey of shipbrokers following the halt at Pernis.
Traders were also anticipating an increase in cargoes from Asia, as well as decreased exports of gasoline to the US.