France releases strategic fuel stocks

The French government has been releasing stocks of diesel, gasoline, jet fuel and crude from its strategic reserves this month, according to several market sources.

The release — mainly diesel and gasoline, with smaller volumes of jet and crude — coincides with disruption to France's fuel supply in recent weeks, caused by refinery and port workers going on strike as part of nationwide protests against the government's pension reforms.

Strategic oil stockpiles in France are partly administered directly by the state and partly by private companies on behalf of the state. Traders say the fuel stocks released would be delivered directly to retailers such as supermarkets, although major French supermarket chain Carrefour has yet to respond to a request for comment.

There has been no official confirmation of the strategic stocks release. "Information on stocks is confidential," the French energy ministry told Argus. French oil industry association Ufip also declined to comment.

The four largest out of France's six conventional oil refineries are shut because of the strikes, while the other two are running at reduced rates because of challenges getting crude in and moving products out. The multi-sector strikes are probably weighing on French diesel demand, but traders and analysts expect the reduction in supply to be more significant and that commercial stocks are likely being depleted rapidly as a result. The effect on wider regional markets has been muted so far because the strikes are slowing down trading across France's borders, but traders expect a stronger impact when cross-border flows can flow smoothly again.

The French government released fuels from strategic reserves last October when a previous round of pay-related strikes shut in most of the country's refining capacity, but a high level of diesel exports from China made east-west arbitrage shipments extremely profitable over the following months. In December last year, France had the largest monthly diesel stockbuild in eight years, according to Eurostat data.

By Benedict George and George Maher-Bonnett