LONDON, Oct 5: European oil companies took advantage of a hurricane temporarily blowing open the gasoline arbitrage to the US this week by stepping up exports, traders said on Friday.

Hurricane Lili boosted US gasoline futures prices earlier in the week as oil production was disrupted and imports were closed in, leading to a flurry of fixtures for October lifting.

The arb opened for the first three days of October, said a trader at a major.

Traders said between 300,000 and 600,000 tons of gasoline had already been fixed for October export, although Thursday’s drop in futures markets as Lili had little impact meant the arbitrage was now doubtful.

They said the shipments were a mixture of Eurograde and lower octane regular gasoline, with the main players being majors ChevronTexaco, TotalFinaElf, BP and Shell, while Swiss-based traders Glencore and Vitol also fixed cargoes.

Traders said that given the delays for feedstock crude imports and a halt in US refinery operations mid-week, gasoline stocks were expected to drop in next week’s data, leading some players to speculatively ship material across.

Last week US crude stocks dropped 10 million barrels after Tropical Storm Lili, though gasoline showed a rise of 1.2 million, according to government data. However US gasoline demand has stayed strong, up 1.8 per cent in the last four-week period compared to last year.

Oil refineries in Texas and Louisiana said they cut output by more than 600,000 barrels per day on Wednesday, as the more powerful Hurricane Lili pounded the coast.

I expect product and crude stocks to drop next week, said a dealer at a major.

The largest US crude import facility, the Louisiana Offshore Oil Port, was still shut on Friday as it assessed damage from Lili, though oil majors along the Gulf Coast have so far reported little damage.

NYMEX November gasoline was 75 points softer at 79.50 cents a gallon, after hitting a high of 83.40 cents earlier in the week.

The hurricane was not as strong as expected, so it’s put a bit of pressure on here as the market has not dropped as much. Eurograde is looking a bit tight to arb, a dealer said.

Prices on the benchmark ARA gasoline barge market dropped just $2 on Friday to $273-$278 a ton, supported by reasonable demand.

One trader said shipments had been locked into the arbitrage at a time when the backwardation on US unleaded futures was less pronounced than on European swaps.

Traders were divided as to whether shipments in October would be higher than for September, when around one million tons of gasoline crossed the Atlantic from the traditionally long European market.—Reuters