LONDON: European product swaps declined on Monday, tracking sharp falls in crude oil following a groundbreaking deal with Iran over the weekend.
Product swaps made large gains throughout last week, however, on the back of refinery outages.
Traders were divided on the long-term impact on the products market of the Iranian deal, which may increase oil supplies.
"The negotiations with Iran had an impact (on swaps) as it had with every oil product," a paper trader said.
"Without the agreement there might have been some more sanctions on Iran so even if its oil output isn't increasing, at least it won't decrease and that has pushed prices lower."
Other traded suggested the agreement will have little to no impact on Europe's oil products.
Gasoline swaps weakened after a short-lived rally late last week following the start of Motiva Enterprises' 600,000 barrels-per-day (bpd) refinery in Texas and a power outage at another refinery.
"Gasoline swaps are weak again on a crack basis. We had a rally on the US open arbitrage but it is back lower again. There is not much liquidity," a trader said.
The months of December to February are traditionally a period of weak gasoline demand, the trader added.
Diesel swaps were down from Friday levels but higher than a week ago and they were expected to rise because of tighter supplies in the Mediterranean where refiners have reduced crude processing rates in the wake of weak margins.
Diesel cargoes from northwest Europe are expected to move into the Mediterranean in the coming months.
The December gasoline barge swap was at $954.71 a tonne fob ARA, up from $935.35 a tonne last week. The January swap was at $950.06 a tonne fob ARA, up from $935.31 a tonne.
The December crack swap rose to $3.53 a barrel from $3.14 a barrel. The January swap was pegged at $3.73 a barrel, up from $3.53 a barrel.
The December naphtha cargo swap traded at $946.55 a tonne cif NWE, up from $914.75 a tonne. The January swap was at $933.12 a tonne, up from $906.75 a tonne.
The December crack swap weakened to minus $2.75 a barrel from minus $5.52 a barrel last Monday. The January crack was at minus $3.77 a barrel, up from $6.08 a barrel.
The December ICE gasoil futures contract was down $3.50 at $934.25 a tonne at 1600 GMT.
The December and January gasoil contracts traded in a backwardation of 25 cents a tonne.
The December gasoil barge swap was quoted at $933.98 a tonne fob ARA. The January swap was at $932.26 a tonne.
The December diesel barge swap was at $13.00 a tonne fob ARA, up from $11.50 a tonne last week. The January swap was at $12.88 a tonne from $12.00 a tonne.
The Mediterranean diesel cargo swap was at $20.50 a tonne cif Med for December, up from $18.82 a tone last week and $19.25 a tonne cif Med for January, little changed.
The December jet fuel cargo differential swap was trading at $68.13 a tonne cif NWE, up from $65.45 a tonne. The January contracted traded at $68.38 a tonne, up from $67.05 a tonne.
The premium on fuel oil with 1 percent sulphur content over fuel oil with 3.5 percent sulphur, known as the hilo, was at $31.02 a tonne for December, up from $28.25 last week.
The spread between the Asian and European high sulphur fuel oil prices in January was pegged at $26.50 a tonne.