​Stronger U.S. Gasoil Diffs Seen Further Stifling Europe Exports

Monthly volumes of exports of ultra-low-sulfur diesel to Europe from the U.S., already at a 19-month low, are falling even further in November, as the arbitrage on the trade route remains shut for nearly two months.

The OPIS Tanker Tracker on FleetMon.com has noted seven tankers with cargoes totaling 310,000 metric tons (2.3 million barrels) said to be chartered to ship ULSD diesel and scheduled to arrive in Europe during November. That's almost a quarter of the average monthly volumes seen in the first seven months of 2014.

Even then, not all fixtures look certain, with vessels either delayed or movements at odds with market intelligence, suggesting that not all voyages may go ahead.

Only one of the seven tankers is on the water and signaling its arrival in Europe -- the Shell-controlled Rainbow Quest, which is heading for Rotterdam in the next 10-12 days.

Although maintenance at U.S. refineries is coming to an end and production is ramping up, the expectation diesel exports will return to stronger levels isn't straightforward, according to JBC Energy.

"Judging by the strong U.S. gas oil differentials, the ramp up to higher volumes could be relatively slow," the Vienna-based consultancy said in a report today.

"U.S. exports to Europe are likely to rise and a crucial factor in determining whether gas oil or diesel cracks can maintain their strength will be the responsiveness of European refiners to higher inflows (from Russia and the U.S.) as well as changes in domestic demand."

Volumes shipped in October to Europe from the U.S. were at 446,000 tons, according to OPIS, the lowest since March 2013, compared to European Commission trade data. Monthly volumes to Europe from the U.S. averaged 1.15 million tons in the first seven months this year, the latest European Commission data available.

The OPIS Tanker Tracker compiles information from traders and brokers, and FleetMon ship tracking to provide a real-time insight into Europe-bound refined products on tankers. Pinpoint detailed shipping information, such as vessel, product and volume being transported, and buying or selling party and gain critical intelligence on the movement of product from port to port. Learn more and take advantage of a 21-day, no-obligation free trial.

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