January 18, 2016 [OPIS] - Diesel stocks may be easing on land but Europe's glut of middle distillates is worsening at sea. Volumes of ULSD tracked on ships at anchor or temporary floating storage outside ports is escalating, as tankers importing cargoes slow sailing speeds or stop near strategic ports to delay arrival.
Ultra-low-sulfur diesel on six ships identified at anchorage in northwest Europe and the Baltic region is tallied at 726,000 metric tons (5.7 million bbl), according to the OPIS Tanker Tracker. That’s up from the 640,000 tons seen on Jan. 4.
Furthermore, there are a further nine vessels being tracked, with combined cargoes of 449,000 metric tons, that have currently slowed or stopped around the strait of Gibraltar with no clear destination, signaling no likely buyer or port to discharge their cargoes.
Delivered prices for diesel in northwest Europe as assessed by OPIS are the lowest in records going back to 2008, nearly 15% down from the start of the year as Brent futures collapse.
High land inventories amid rising diesel shipments from new suppliers in the Middle East are worsening a regional glut even as winter demand kicks in and refineries strive to reduce distillate yields.
U.S. exports of ULSD arriving in the 28 member countries over January are tracked at 998,000 tons, information compiled from traders, brokers and vessel satellite-tracking data shows.
Russian volumes are so far seen at 1.3 million tons, including 1.2 million tons shipped from the Baltic port of Primorsk. That was expected and reflects the January loading program, but volumes for February are still uncertain.
Further underscoring the volatile trading environment are gasoil exports tracked from the Latvian port of Ventspils, where oil trader Vitol controls the region’s largest refined product storage hub. Over the next four days, the trader is due to load two tankers, each with 70,000-ton low-sulfur gasoil cargoes, which are anticipated to make a rare voyage across the Atlantic in trades that would take advantage of higher heating oil futures in New York.
The Ploutos is loading today, while the Kamone Victoria is signaling it will arrive at Ventspils in three days. Such cargo sizes indicate either floating storage or a trans-Atlantic voyage based on Vitol’s prior trading patterns.
A further 350,000 tons on four Long Range 2 tankers, the biggest product tankers that can take 90,000-ton cargoes, are currently transiting around the Cape of Good Hope, after loading in the Middle East or Asia.
The extended voyage, rather than transiting the Suez Canal, delays arrival by a further 20 days or so. Two (SKS Delta and STI Lombard) are due to arrive in the area in the first week of February, and the other two (Front Puma and Fair Seas) from Feb. 22, according to the OPIS Tanker Tracker.
