Prices of German products decline due to weak demand.

German prices for heating oil, diesel, and gasoline decreased in the week ending 19 June, reaching their lowest point since the onset of the US-Israel-Iran conflict. Domestic spot demand for heating oil and diesel also saw a decline during the week.

The primary reason for the price drop was a significant decrease in Ice gasoil futures values, following the announcement of a framework agreement to end the conflict between Iran and the US on 14 June.

The wholesale price for diesel in Germany, loaded by truck, returned to levels seen before the war, aided by a temporarily reduced energy tax rate. This tax reduction, which lowers wholesale diesel prices by €14.04 per 100 litres, expires at the end of June. However, prices for German greenhouse gas (GHG) reduction obligations have increased, which is mitigating the decrease in domestic wholesale fuel price levels.

Argus reported lower average daily spot volumes for heating oil and diesel compared to the previous week. Traders indicate that this is due to many consumers anticipating further price drops resulting from reduced geopolitical tensions, leading them to delay purchases.

In the current week, market participants expect an increase in fuel demand. With the tax reduction expiring on 1 July, there are likely to be pull-forward effects as consumers and traders aim to take advantage of the lower rates. In certain regions, particularly in the north, agricultural customers began bulk purchasing diesel this week.

Consequently, import demand along the Rhine is rising as traders replenish their tanks in anticipation of increased demand. However, falling water levels on the Rhine are causing significantly higher freight rates.

In the south, the availability of heating oil remains constrained. At the Bayernoil consortium's 214,500 b/d Neustadt-Vohburg refinery, individual shareholders reported ongoing loading disruptions, and some sellers are temporarily not providing any product.