Europe premium gasoline drops; crude at 7-month low

LONDON: European premium gasoline barges fell on Tuesday, tracking steep losses in crude which has plummeted to a seven-month low. Financial turmoil in the wake of Lehman Brother's demise has heightened fears fuel demand could fall as the ramifications are felt in the broader economy.

Gasoline prices have been pressured further by the limited damage caused by Hurricance Ike over the weekend, with hopes for quick refinery restarts on the US Gulf Coast limiting arbitrage opportunities for European traders.

However, short-term supply problems in the United States are expected to provide a limited floor to prices, as investors wait to see how quickly refinery output can get back to full capacity. European benchmark 10ppm barges dropped to around $850 a tonne fob ARA from $890 a tonne on Monday.

The gasoline crack eased to around $14 a barrel from $15 a barrel on Monday. Prices had risen above $20 a barrel on Friday as trader's awaited Hurricane Ike's arrival on the US Gulf Coast.

Crude futures on the NYMEX exchange have fallen by more than $8 a barrel since Friday. Gasoline in Europe has taken some support from the start of autumn refinery maintenance. Shell's Pernis refinery - Europe's largest - started maintenance this week, according to industry sources. Shell refused to comment. Mongstad in Norway, Sines in Portugal and Sannazzaro in Italy are also believed to be undergoing maintenance programmes.