US fuel oil production drops coming into March, Mexican imports grow further

Changes in monthly US residual fuel oil from February to March (so far):

• Supply down 239,000 b/d to 122,000 b/d
• Production down 19,000 b/d to 239,000 b/d
• Imports down 44,000 b/d to 143,000 b/d

Total US fuel oil production has declined for the second-consecutive week. Refineries on the West Coast have produced 32% less fuel oil so far this month, followed by a 16% drop in production from East Coast refineries. Meanwhile, Gulf Coast refineries have produced 7% more fuel oil this month.
US fuel oil stock levels have declined this month despite less fuel oil supplied out of the US storage tanks to outlets like bunker fuel blenders and bulk terminals, to refinery coking units for upgrades to other higher-value products, or to power generation. Supply, or implied demand, has plunged to its lowest level in 10 weeks.

Overall US refinery utilisation has averaged about 86% so far this month, down from 87% in February.

US fuel oil imports have dropped by 23% between February and this month. According to cargo tracker Vortexa, about 73% of US fuel oil imports have arrived on the Gulf Coast this month while the remaining 27% has arrived on the East Coast.

Changes in monthly average US residual fuel oil from February to March (so far):

• Total US stocks down 131,000 bbls to 31 million bbls
• Gulf Coast stocks up 236,000 bbls to 19.19 million bbls
• East Coast stocks down 785,000 bbls to 5.20 million bbls
• West Coast stocks up 399,000 bbls to 5.30 million bbls

Mexico has been the US’ biggest fuel oil import source so far this month, a position it has been holding since last April, Vortexa data shows. Fuel oil imports from Mexico accounted for 30% of the US’ total in February. And this share has increased further coming into March, with about 44% of imports arriving from Mexico.

Bahamas (23%) has replaced Iraq to emerge as the US’ second biggest fuel oil import source this month, while Saudi Arabia (14%) became the third biggest fuel oil source by replacing Malaysia.

The EIA’s fuel oil export figures lag two months behind figures for imports and other data. Going by Vortexa data, US fuel oil exports have dropped sharply from February to March.

More than half of the US fuel oil exports have departed for Canadian and Egyptian ports so far this month.
Source: Engine Technologies