Historically low Rhine water levels have severely disrupted fuel deliveries from the Amsterdam-Rotterdam-Antwerp (ARA) hub to parts of inland Germany, but weak middle distillate demand and access to alternative supply sources have so far limited the impact on the country's inland fuel market.
Rhine water levels fell to historic lows in the week ending 14 August, with the water level at the Kaub bottleneck on the Middle Rhine most recently standing at just 11cm. As a result, supply from ARA to tank terminals on the Main river and to Upper Rhine destinations has virtually come to a standstill.
Within the Upper Rhine, shipping has become nearly impossible on the stretch south of Karlsruhe towards Switzerland. Transport activity is now largely concentrated on the Lower Rhine, where Duisburg, Dortmund and Neuss remain accessible, although vessel loading capacities are heavily restricted.
Shipowners do not expect any short-term improvement because of the lack of widespread rainfall.
The Rhine constraints have coincided with weak demand across Germany, helping to limit the impact on inland fuel supply.
Heating oil, diesel and gasoline spot sales volumes reported to Argus in the week ending 14 August declined from both the previous week and the same period last year.
Heating oil demand remains particularly weak because of high prices and low seasonal consumption during the summer. Traders said purchasing activity is unlikely to rise significantly until consumption increases, regardless of price movements. Heating oil volumes reported to Argus fell by 16pc on the week and by 68pc on the year.
The steepest annual declines were recorded along the Rhine corridor. Reported heating oil volumes fell by 97pc in the Rhine-Main area and by 90pc in the Cologne region. Many buyers instead turned to refineries in southern Germany, including the Miro consortium's 310,000 b/d Karlsruhe refinery.
Diesel demand also weakened, although it continues to receive some support from the harvest season. Diesel volumes reported to Argus were about 21pc below the previous week and 29pc below the volume recorded a year earlier. Regional differences remain wide, reflecting product availability and varying harvest progress.
Market participants are increasingly focused on developments in southern Germany. Many buyers had shifted to the region in the previous week because low Rhine water levels restricted barge deliveries and surplus supply at Bayernoil's 215,000 b/d Neustadt-Vohburg refining complex made it an attractive alternative source.
But heating oil and diesel volumes in southern Germany fell by more than 60pc last week after a technical disruption at Bayernoil tightened middle distillate supply and pushed prices higher. The disruption has eroded some of Bayernoil's competitive advantage over other supply regions, although it remains one of Germany's most competitively priced markets.
