The Northeast refiner is set to at least double its distillates export volume out of the Northeast in the near term. This is in line with the ongoing trend of a continuous outflow of high-sulfur diesel and light cycle oil from the Northeast to Europe in the past few months due to favorable arbitrage economics.   
Traders observed that Sunoco had begun to market diesel exports out of Eagle Point, and the first cargo on offer could be for early August loading.   
The Sunoco trading team has been meeting with cargo traders in support of its export ambitions and an August trip to Houston is planned.   
Sunoco is currently exporting a monthly average of about four heating oil and light cycle oil cargoes out of its Philly refineries or third-party terminals, mostly for deliveries to Europe. These cargoes are sold on a free-on-board basis.   That average monthly export volume will double to eight cargoes a month from August onwards, with ultra-low-sulfur diesel cargoes making up the extra export volume.     
The export volume could rise above eight cargoes a month, depending on the prevailing arbitrage economics. The Northeast diesel market outlook points to a stronger push for exports in the future as PBF’s 190,000-b/d Delaware City refinery is set to stabilize operations after its recent restart.   
The Delaware plant is expected to add about 65,000 b/d of gasoline and 40,000 b/d of distillates to the Mid-Atlantic and Northeast markets.   Sunoco may add jet fuel to that export products offer in the future if the arbitrage opportunity arises.

EARLY AUGUST

The first ULSD export cargo is expected to load at Sunoco Logistics’ 5-million-bbl capacity Eagle Point terminal in early August. That would be the first ULSD export cargo for Sunoco in recent memory.   The refiner was not able to export ULSD previously because of logistics constraints.   However, that export opportunity opened up when Sunoco sold the Eagle Point terminal, which is part of the monthballed Eagle Point refinery, to Sunoco Logistics for $100 million in late June.   
The sale enabled Sunoco Logistics to reopen the terminal for operation officially July 1. The 145,000-b/d Eagle Point refinery will remain shut. That New Jersey refinery was shut permanently in February 2010 due to weak refining margins.   The Eagle Point tank farm is one of the few Northeast terminals, which could accommodate both 38,000-ton-capacity Medium Range tankers as well as 60,000-ton-capacity Large Range 1 tankers because of its deep vessel draft. This offers much coveted flexibility to shippers who may want to buy larger cargoes because of the economies of scale. The increasing export volume is part of Sunoco’s ongoing effort to gradually increase commercial trading activities and raise third-party trading volumes in its profit/loss trading book as reported by OPIS in December 2010.   
Prior to a move to increase commercial trading activities, Sunoco had focused more on marketing products from its refineries, and rarely delivers or takes sizeable deliveries on the Merc.   In November 2010, Sunoco delivered a sizeable volume of heating oil to the Merc for the first time in more than a decade.  Besides locking forward refining margins, increasing paper and directional trading activities, Sunoco is now also involved in more arbitrage plays for delivering Gulf Coast barrels via pipeline to the Northeast when opportunities arise.