April 10, 2020 [Argus Media – Published April 06, 2020] – Storage hubs in the Caribbean and central America are filling up with clean products, as the world’s shrinking demand for fuel creates a growing surplus of products seeking a home.

Just since 1 April approximately 2.7mn bl of gasoline and diesel has loaded for Panama, or around 460,000 b/d — more than double the 190,000 b/d loaded in March, according to estimates from oil analytics firm Vortexa. March volumes were already the highest on record since Vortexa began tracking this data in April 2017.

While gasoline and diesel loadings out of Panama have also picked up since January, outgoing volumes are heavily lagging incoming barrels. March gasoline and diesel cargo loadings out of Panama reached 30,000 b/d in March, compared to 100,000 b/d arrived in March, Vortexa data show. So far in April, arrivals tallied 210,000 b/d, compared with 7,000 b/d in departures. The difference suggests Panama is building up a large stockpile of gasoline and diesel.

The bulk of the product heading into storage at Panama comes from the US Gulf coast — including 66pc of April gasoline and diesel cargoes — since refiners there have been able to maintain operations at reduced rates thanks to export outlets such as Panama.

Since Asian refiners began restoring operations last month, India, South Korea and Taiwan have also been sending more products to Panama for storage. Much of the US Gulf coast products are stored at Cristobal, on the Caribbean side, while most of the Asian supplies are stored at Balboa, on the Pacific side.

Borco starts to fill

On the other side of the Caribbean, the Bahamas is performing a similar role. Borco, Buckeye’s 26.2mn bl crude and products storage terminal at Freeport, Bahamas, has been receiving increased volumes from the US as well as Canada and Europe.

Approximately 96,000 b/d of gasoline and diesel loaded in March for the Bahamas, more than triple the 24,000 b/d that loaded in February, marking the highest level since September 2018, Vortexa estimates show.

US gasoline demand fell to its lowest level in more than 26 years in late March to 6.7mn b/d, according to the US Energy Information Administration. In addition to a lack of demand, a strong contango in the forward curve has also incentivized putting product in storage, while still-strong diesel margins have kept refineries from completely shutting.

June Nymex RBOB traded 6.05¢/USG above the May contract today, compared to a 2.1¢/USG discount at the same time last year.

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