French oil-processing industry barely running as strikes enter week four

BLOOMBERG

France’s oil-processing industry is running at a fraction of normal capacity as worker strikes enter their fourth week.
Four of the nation’s six refineries are barely operating after Exxon Mobil Corp started taking the larger of its two French facilities out of service at the weekend because it can’t get crude into the site. The country’s labour action is causing ripple effects across the global oil market, weakening prices of grades from the North Sea and West Africa.
Walkouts have reduced French diesel supply by 200,000 barrels a day, Energy Aspects said in a report. About 80% of the nation’s crude-processing capacity could be offline, data compiled by Bloomberg show.
“Strike action is coinciding with refining maintenance in northwest Europe and unworkable arbitrages at key routes,” Energy Aspects said. Walkouts have accelerated the pace at which diesel is being taken out of storage, it added.
France relies on diesel imports to meet supply at the pumps. Tankers bound for French ports have diverted in recent days, with key import terminals hobbled.
The diesel market showed signs of strengthening in early March, evident in spreads in ICE gasoil futures, the region’s benchmark contract.
The premium on the contract closest to expiry rose to as much as $36.50 on March 22 — more than double the level at the start of the month — before weakening at the end of last week.
Mounting economic headwinds might also weigh on Europe’s longer-term demand, according to Energy Aspects. Fitch Solutions also sees strikes having a muted impact on the fuels market this time around.