Recovering U.S.-Europe Diesel Exports Add to Region's Supply Pressures

U.S. exports of diesel to Europe arriving in July are on track to reach a six- month high, adding to the pressure of additional supplies from the Middle East, India and Russia, which are depressing prices and cracks in the region.

Some 1.25 metric tons on 30 tankers is tracked from the U.S. being discharged at ports in northwest Europe and the Mediterranean in July, according to the OPIS Tanker Tracker. They're the highest monthly volumes from the U.S. since November 2015, based on data from Eurostat and the tracker.

A further five tankers have already been chartered to ship a further 230,000 tons of ultra-low-sulfur diesel from the U.S. to arrive in August, information from brokers, traders and vessel-tracking data show.

With more than 100 vessels coming this month, tracking suggests the flood of diesel continues unabated, with more than 4.2 million tons coming in July, the fifth consecutive month that levels have topped the 4-million-ton mark.

Europe's diesel imports hit a record 5 million tons in March, 44% higher than the prior-year period. Overall first-quarter figures showed a 39% rise, according to Eurostat, the European Commission's statistics database, even as U.S. imports declined 10% over that period.

Cargoes from Russia and the Baltic are tracked at 1.7 million tons this month, with 760,000 tons coming from Saudi Arabia -- the second-highest on record -- as well as 180,000 tons from India, data shows.

Ultra-low-sulfur diesel cargo prices for northwest Europe this week fell under $400 per ton for the first time since early May, and have dropped 10.5% so far this month, OPIS assessments show. Prices have albeit recovered from a 12-year low of $248.75 per ton on Jan. 20.

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