U.S. Diesel Tracked to Europe Seen Tripling Month on Month

Nearly 3.5 million metric tons (26 million bbl) of ultra-low-sulfur diesel is tracked arriving in Europe over March on 84 tankers, according to the OPIS Tanker Tracker. The tally shows that volumes from the U.S. are so far estimated to triple from last month's levels, when just 298,000 tons on eight tankers was seen arriving in Europe over February. They were the lowest levels tracked since OPIS started following the U.S.-Europe seaborne diesel market in January 2014 amid arbitrage calculations showing it was unprofitable to buy ULSD in the U.S. Gulf and ship it to northwest Europe for sale at a profit.

This month, volumes from the U.S. are at 904,000 tons on 21 tankers, data compiled from traders, brokers and satellite-tracking data shows. However, tankers may still opt to ship to South America or the Caribbean, especially as arbitrage conditions do not appear to have changed.

Inflating inbound volumes to northwest Europe this month are shipments from Baltic ports. Litasco shipped 192,000 tons from the Russian port of Vysotsk in February, and in the first week of March another 181,000 tons is already scheduled to load from the port over the next two weeks.

So far, Vitol is loading 241,000 tons from the port of Ventspils in March (the February tally was 500,000 tons), including cargoes on three Long Range 2 product tankers, SKS Tagus, SKS Tweed and SKS Tana. Each are capable of taking 90,000-ton cargoes and were used for floating storage in Europe earlier this
year.

Ventspils cargoes normally discharge in northwest Europe, although a handful this year were shipped trans-Atlantic when the gasoil arbitrage briefly opened.

This month also sees larger ships bringing in ships from Asia and the Middle East Gulf countries, even amid talk that the low-sulfur gasoil produced by new or upgraded refineries in Saudi Arabia and the UAE finds difficulty meeting
European specs.

There are seven Long Range 2 ships, carrying 565,000 tons arriving from either Saudi Arabia, Asia or India, data shows. However, two ships have options to ship their cargo east towards Singapore and may eventually be removed from the tally.

Last month, tracked volumes to Europe reached 3.6 million tons on 81 tankers, with Middle East countries the second-largest suppliers after Russia, at 610,000 tons. This is the first time the region has surpassed other key providers, including the U.S. and India, in monthly volumes.

Russian volumes in February were estimated at around 1.6 million tons and so far look to reach 1.4 million tons in March.

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