Industryweek 21589 Diesel Fuel 1
Industryweek 21589 Diesel Fuel 1
Industryweek 21589 Diesel Fuel 1
Industryweek 21589 Diesel Fuel 1
Industryweek 21589 Diesel Fuel 1

World Buying American Diesel as Fast as Refiners Can Make It

May 9, 2017
 A combination of seasonal events is giving refiners on both the Atlantic and Gulf coasts a chance to boost exports to Europe and South America.

The international market has a message for American refiners: Stay calm and keep turning crude into diesel.

While a global glut has pushed crude prices down to five-month lows, manufacturers of middle distillates can’t make enough to satisfy demand. A combination of seasonal events is giving refiners on both the Atlantic and Gulf coasts a chance to boost exports to Europe and South America.

“Everybody is freaking out about high refinery rates” in the U.S., said Robert Campbell, head of oil products research for Energy Aspects in New York, as plants in the U.S. processed record levels of crude into refined products last month. Domestic demand for gasoline may be slipping in the U.S., but there’s no reason to panic when it comes to distillate.

Argentine diesel demand peaks in the second quarter, and Brazil’s buying strengthened after late April when Petroleo Brasileiro SA raised wholesale prices 4.3%, Campbell said.

Meanwhile, maintenance in Russia, the Middle East and Algeria has kept Atlantic Coast refiners busy sending diesel cargoes to Europe.

Preliminary weekly data from the Energy Information Administration show that exports of distillate advanced to a record in mid-April. U.S. refiners were shipping 1.42 million barrels a day, or roughly five medium-sized tankers, abroad, mostly from the Gulf Coast.

These shipments are run-of-the-mill for facilities in Texas and Louisiana, but it’s less common to see deliveries leave from the Atlantic Coast, which sent at least 1.55 million barrels to Europe and Algeria since April, Bloomberg shipping analysis shows.

Glut Clearing

The surge in overseas demand is helping clear a domestic glut for middle distillates, a category that includes diesel and heating oil. U.S. diesel days of supply fell in April to 34.6, the lowest level since November 2015 and down from a 52-week high of 49.3 in January.

There’s “no incentive” now to ship the middle distillate fuels from Houston to New York on their typical route along the Colonial Pipeline, Campbell said. And at least four more distillate tankers are booked to haul Atlantic Coast diesel to Europe in the next week, according to preliminary shipping fixture reports.

The material is readily available in New York and it’s the right price,” Campbell said by phone.

By Laura Blewitt

Popular Sponsored Recommendations

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

3 Best Practices to Create a Product-Centric Competitive Advantage with PRO.FILE PLM

Jan. 25, 2024
Gain insight on best practices and strategies you need to accelerate engineering change management and reduce time to market. Register now for your opportunity to accelerate your...

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

Transformative Capabilities for XaaS Models in Manufacturing

Feb. 14, 2024
The manufacturing sector is undergoing a pivotal shift toward "servitization," or enhancing product offerings with services and embracing a subscription model. This transition...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!