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Traders rush to supply fuel to the U.S. as Texas freeze bites

Published 02/19/2021, 06:50 AM
Updated 02/19/2021, 06:55 AM
© Reuters. FILE PHOTO: U.S. Coast Guard Cutter Narwhal patrols near some of the 27 oil tankers anchored off shore from Long Beach

© Reuters. FILE PHOTO: U.S. Coast Guard Cutter Narwhal patrols near some of the 27 oil tankers anchored off shore from Long Beach

By Ahmad Ghaddar, Stephanie Kelly and Laura Sanicola

LONDON (Reuters) - Massive refining outages in the U.S. state of Texas due to freezing weather has led to a flurry of fuel tanker bookings from Europe, while several carriers were diverting away from the U.S. Gulf Coast, traders and analysts said.

The cold snap has halted about one-fifth of the United States' refining capacity and nearly all oil and natural gas production in west Texas.

Traders were looking to fill the gap in refinery supplies with bookings from elsewhere.

U.S. Atlantic coast imports of diesel and gasoil from other countries was seen at 380,000 barrels per day (bpd) in February, at the same level of a multi-year high reached in November, according to oil analytics firm Vortexa.

The rise is led largely by higher intake from northwest Europe, with 140,000 bpd of imports, a multi-year high, Vortexa said.

Imports on the route are also on track to remain firm in March, with around 2.5 million barrels currently forecast to arrive, Vortexa said. 

Gasoline exports from Europe to North America have also spiked.

Loadings of gasoline and blending components along the route were pegged at 417,000 bpd Feb. 1-18, according to Vortexa, the highest level since July 2020, and 27% higher than average for the prior three months.

At the same time, clean products exports from the U.S. Gulf Coast have fallen sharply.

Loadings are holding at 1.3 million bpd on a 10-day moving average basis, nearing levels last seen in May 2020, when coronavirus lockdowns greatly hampered demand, according to Reid l'Anson, senior commodity economist at Kpler. That compares with 2.5 million bpd last year, he added.

The disruptions are having a big impact on prices.

The U.S. crack spread, a key measure of refining margins, settled at $15.43 a barrel on Thursday, the highest since April 2020, Refinitiv Eikon data showed.

"The cargoes are going to follow the margins and with prices improving here in the U.S. that would signal more cargoes to the U.S." said Phil Flynn, a senior analyst at Price Futures Group in Chicago.

Gasoline and diesel profit margins in Europe have also risen, with the northwest Eurpan barge crack spread hitting its highest since October around $4.50 a barrel on Thursday.

The disruptions also led to tankers that were due to load in the U.S. Gulf to divert away from the energy hub. Vortexa data shows four tankers, including the very large gas carrier (VLGC) Captain John NP.

© Reuters. FILE PHOTO: U.S. Coast Guard Cutter Narwhal patrols near some of the 27 oil tankers anchored off shore from Long Beach

"Everything is getting delayed or moving out of the Houston area and not coming back," a shipbroker told Reuters.

Latest comments

Green energy what a joke, now you have problems.
If we would just burn the BS from the right-wingers we'd have plenty of energy. The problem in Texas was with frozen NATURAL GAS wells that froze along with Texas' go-it-alone electricity grid.
 Dan White wind turbine accounts for 20% of texas electricity generation. ALL of which went offline. guess which fuel type generated much needed electricity during the cold snap?? COAL and NATGAS operators!! sure there are some natgas/coal that went offline during extreme cold conditions but the extent of which is no where a match with 100% of windturbine DOWN. you cant coat that any other way.
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