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Europe's US diesel imports head toward record in August: traders
[LONDON] Europe is set to take a record of more than 2 million tonnes of US diesel in August after a string of refinery woes pulled in cargoes that have for months been diverted elsewhere, trading and shipping sources told Reuters.
Refinery fires and falling stocks - including the closure of the largest European plant, the 404,000 barrel per day (bpd) Pernis refinery in the Netherlands - have made Europe a target destination for US exports, which hit their own record above 1.6 million bpd in July.
"European diesel imports have been coming in lower than 2016 since February and this, coupled with a resurgence in demand, is why the market has tightened so much," said Robert Campbell, head of oil products analysis with Energy Aspects.
"With the outage at Pernis and in the Med there has been a strong demand for resupply," he said.
Record-breaking US refinery runs have led to bumper exports. With open arbitrage, BP booked distillate cargoes to sail east from the US East Coast, sources said.
The United States is a vital source of ultra low sulphur diesel for Europe, which does not produce enough to meet demand.
In 2015, Europe's monthly US diesel take exceeded 1.5 million tonnes several times, according to data from the US
Energy Information Administration (EIA). The data showed those cargoes peaked last year at 1.74 million tonnes.
For much of 2017, US diesel landed in Latin America, where refinery issues in Mexico, Venezuela and Brazil created large demand for imported fuel.
A spate of shipments out of the US Gulf Coast refining hub, which typically have several potential destinations, were mostly diverted to Latin America from Europe, traders said.
Energy Aspects' Mr Campbell said Europe's June imports from the States totalled about 1 million tonnes in the end, a relatively low figure.
The low level weighed on gasoil stocks in the Amsterdam-Rotterdam-Antwerp hub, which at 2.6 million tonnes stand at their lowest since December, more than 18 per cent below August 2016, according to data from PJK International.
While Pernis is now restarting, Greece's 100,000 bpd Elefsina refinery is still closed after an unplanned issue forced it to shut down in July and declare force majeure on diesel exports. On Monday, a fire struck a diesel unit at Israel's 100,000 bpd Ashdod refinery that its owner said could force it to import more diesel than planned.
"It should be a record," one traders said of the shipments.
"Turnarounds in September and October mean we need it."