[RE]fuel Report Market Commentary

Prices for Year 10 and 11 certificates continued to face pressure, falling a further 0.2 p each to be assessed at 19.3 p/certificate and 19.5 p/certificate respectively taking it almost a penny above the theoretical value, according to Energy Census data.

While activity on Year 11 remains muted, bids for Year 10 had been heard earlier in the week at levels around 19.5 p/certificate, according to market sources, but had melted away as mineral diesel prices moved up and applied further pressure to the differentials for RME and FAME 0.

Blending remained the focus as the more stringent requirements of winter specification road fuels continued to discourage the buying of certificates.

“The incentive is there to blend physical rather than to buy the RTFC,” one source said, with a second source expecting pressure to continue and the theoretical value to remain adrift of actual values.

“Ticket prices and physical prices seem to have been disconnected, the physical is a lot lower,” the second trader said, a move that is not uncommon through the winter months adding; “It should be lower.”

With diesel prices rising again as crude crossed the $70/b level, low sulphur diesel moved up to trade at levels around $612/mt, according to market sources.

That applied further pressure to RME premiums versus the low sulphur gasoil futures contract, which were heard bid at $280/mt and offered at $286/mt during Friday trading, according to market sources.

That differential has fallen from $490.25/mt assessed by Energy Census on October 27, to now stand at $284/mt. UCOME prices remained quoted at €840/mt, equating to $1,019/mt with much of the movement on prices recently down to currency changes.