USAC sees 10 days without European gasoline import
The US Atlantic Coast did not receive a single European gasoline cargo from October 28 to at least November 6, according to US Customs data, the longest period since S&P Global Platts started tracking the data in August 2015.
That lack of incoming supply helped push cash gasoline differentials to an eight-week high and forced suppliers to drain their own inventories down to levels not seen in several years.
Gasoline stocks in the Central Atlantic, which encompasses the New York Harbor area, fell to 24.02 million barrels last week, the lowest total since April 2011, according to US Energy Information Administration data.
While deliveries from Irving Oil’s 300,000 b/d refinery in Saint John, New Brunswick, and other Canadian terminals have remained steady, imports from European countries have all but disappeared since late October.
The last European cargo to deliver into the Atlantic Coast was the Stenaweco Excellence, which deposited 280,381 barrels of conventional gasoline in New Jersey from Portugal on October 27, US Customs data showed.
European imports into the Atlantic Coast have been slowing since September, pulled away by a better arbitrage to West Africa and Asia, according to traders. In October, 5.42 million barrels of gasoline crossed the Atlantic into the US East Coast, the lowest monthly total since March.
Regional refineries have struggled to keep up with demand despite utilization rates running at roughly 21.8% higher than their five-year average.
That supply dearth has kept spot prices supported and pushed a sizable backwardation into the cash market.
Spot RBOB in the New York Harbor trading hub peaked November 3 at NYMEX December RBOB plus 7.95 cents/gal, its highest assessment since mid-September, when the market was still reeling from the impact of hurricanes Harvey and Irma.
Backwardation ranging from 35 to 50 points/d has carried the benchmark lower this week, as it was assessed Wednesday at 5.25 cents/gal over futures.
It’s that strong backwardation that has failed to attract vessels, since the landing price of gasoline would be much lower than when the cargo sets sail. While traders expect some cargoes to arrive soon, the market is still struggling to compete with demand in the Mediterranean and West Africa.
“Talk today indicated barrels coming as sellers get more aggressive,” one trader said.
At least six cargoes carrying refined products from the UK were scheduled to deliver into the Atlantic Coast starting November 7, according to data from cFlow, Platts’ trade-flow software. It’s unclear how many of those are carrying gasoline.
Supply issues in the New York Harbor have worked in one group’s favor: Gulf Coast suppliers.
The arbitrage to send gasoline from Houston, Texas, to New Jersey had long been a thorn in the side of traders who rely on Colonial Pipeline to meet supply needs, largely remaining unprofitable since the end of 2016.
That arbitrage reopened after Harvey and, with the exception of a 10-day period at the start of October, has been profitable for shippers. Sending CBOB the length of Colonial Pipeline has netted shippers an average 4.13 cents/gal so far in November, the biggest profit since mid-September.
Value for space on Line 1, usually a good barometer of demand to send product up the pipeline, was assessed flat Wednesday, its highest price since August 21.