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Europe Distillate Storage Gains as U.S. Diesel Exports Lift Higher

Feb. 23, 2015 at 15:12 by Michelle Wiese Bockmann in Tanker and Oil Industry

Distillate storage in northwest Europe, including diesel, has risen by 12% over the past four weeks, as traders charter above-average numbers of tankers to ship volumes from the U.S. ahead of refinery turnarounds planned for later this quarter and next.

Distillates in independent storage in the Amsterdam-Rotterdam-Antwerp region reached 22.86 million barrels in the week ending Feb. 12, according to investment bank BNP Paribas, citing statistics from PJK International.

That's up 56% on the year-ago period and 22% higher than the five-year average, data shows.

As storage gains in the ARA region, so has the number of tankers chartered to ship ultra-low-sulfur diesel to Europe from the U.S., the second-largest supplier to the 28 member countries after Russia.

Eight Europe-bound tankers were chartered last week to each ship 38,000-ton ULSD cargoes from the U.S. Gulf, according to Connecticut-based shipbroker Charles Weber. That's up 60% from the prior week and compares to the weekly average of six ships over the past year, the broker's research shows.

The volumes are higher than anticipated even as the arbitrage is closed on the route. Figures compiled by OPIS indicate that based on spot rates, it hasn't been profitable to buy ULSD in the U.S. Gulf and ship it to Europe for sale for all of 2015.

Last year, exports of ULSD to Europe from the U.S. slowed in late February and March as a prolonged cold snap exhausted supplies of heating oils and prompted rare imports of distillates from Europe.

Some 1.2 million tons of ULSD is tracked being delivered to Europe from the U.S. in February, according to the OPIS Tanker Tracker on FleetMon.com. The figure is equal to the monthly average seen in the first 10 months of 2014, based on European Commission trade data but compares to just over a million tons last February and 550,000 tons in March 2014.

Refinery turnarounds will take some 1.8 million b/d offline in February for north America, peaking at 1.2 million b/d in April, according to London-based energy consultancy Energy Aspects. Europe refinery turnarounds are estimated to peak at 668,000 b/d in March, and 837,000 b/d in May.

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.

Europe Distillate Storage Gains as U.S. Diesel Exports Lift Higher

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