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German Industry Doesn’t Need Additional Oil Reserve Release To Ease Tight Supply

Hamburg oil storage

Germany’s oil industry body doesn’t plan at the moment to ask for more releases from the national reserves to ease tight oil product supply caused by logistical hurdles due to decade-low river water levels, a spokesman for the Mineralölwirtschaftsverband (MWV) association told Reuters on Tuesday.

Following a hot summer, water levels in many rivers in Western Europe—including on the key commodity shipping waterway, the Rhine—have dropped to more than a decade low, hampering barge traffic and affecting Europe’s fuel and refined oil products markets.

Last month, the level of the Rhine at a key chokepoint—Kaub in Germany—was at its lowest for the middle of October since at least 2006, Bloomberg reported, citing government data.

At the end of October, Germany’s Economy Ministry said that it had authorized the release of crude oil, diesel fuel, and jet fuel from the national reserves to help areas in the country where supply had tightened due to reduced barge traffic.  

“It is not ruled out there could be a further request but at the moment, it is not the case,” the MWV spokesman told Reuters on Tuesday.

The German state of North-Rhine Westphalia has lifted a ban on tanker trucks on the roads on Sundays, effective November 22 and through May 31, 2019, in order to ease the supply crunch at gasoline stations in the area, the MWV spokesman said.

Due to the shipping restrictions on the Rhine, European heating oil prices could be vulnerable to spikes over the winter, JBC Energy said last month, while researchers at Petromatrix told Bloomberg that Switzerland could resort to releasing strategic fuel supplies in the winter if the critically low levels of the Rhine persist.

The shortage of heating oil in Europe is such that it has driven prices higher and made the arbitrage from as far as Singapore viable, according to traders and analysts who spoke to Reuters earlier this month. Some forecasts say that the low river levels may not recover until January, potentially further distorting the fuel oil market in Europe.

By Tsvetana Paraskova for Oilprice.com

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