French strikes could boost diesel profits elsewhere

By Libby George

LONDON, May 27 (Reuters) - European refiners outside France and oil traders are gearing up to cash in on the unexpected demand for diesel created by French strikes that have blocked oil terminals and shut down refineries.

France is gobbling up diesel and other fuels from private and strategic stocks as four of Total (LSE: 524773.L - news) 's five refineries are shut, while the output remaining is under threat with workers blocking crude imports.

Traders and analysts say the European 2016 soccer championship starting in France next month, which is expected to attract more than a million foreign visitors, will boost consumption and intensify the need for Europe's second-largest consumer of distillates to import diesel.

Consultancy FGE Energy estimates the influx of visitors and their travel within the country will boost diesel consumption - which, unlike jet fuel or gasoline, is needed in cars, trains and generators - by as much as 50,000 barrels per day (bpd).

"As soon as the strikes are over ... they'll import like mad," FGE's head of refining Steve Sawyer said.

In calmer times, the expected increase in demand would have been covered easily, probably in advance and without much of a boost to refining margins.

But the strikes have sapped the distillates in French tanks. French gasoil stocks have been drawn down by an estimated 1.8 million barrels per day, according to PetroMatrix.

The closure of some French refineries since widespread strikes in 2010 also means the country will not be able to replenish its stocks as quickly once they resume production.

All this is diverting vessels towards France and away from the Amsterdam-Rotterdam-Antwerp hub, where brimming stocks had been expected to depress distillate cracks, which are a measure of how much money refineries make producing them, over the summer months.

Industry monitor Genscape has tracked tankers carrying at least 230,000 tonnes of clean petroleum products changing their destinations to French ports over the past three days, mainly to the Le Havre hub.

"If the strike was to end tomorrow, and refinery runs to rapidly restart, we estimate that France's net import of gasoil will have to increase to 700,000 bpd for one month to replenish stocks," PetroMatrix managing director Olivier Jakob said.

"Another 10 days of strikes and France will have to maintain 700,000 bpd of imports for two months."

These estimates compared with France's average imports of 390,000 bpd last year during May and June.

And the soccer tournament will simply add to the need.

"All these big events lead to more movements, so more demand," one oil trader said. "Restocking of empty tanks will make demand even higher." (Additional reporting by Amanda Cooper; editing by David Clarke (Toronto: CKI.TO - news) )