May 29, 2016 [OPIS] - Freight rates for oil tankers hauling cargoes of refined products such as ultra-low-sulfur diesel to Europe from the U.S. are heading toward the lowest level this year as inventories of products remain full.
Rates for Medium Range oil tankers hauling 38,000 metric tons of diesel to Amsterdam from Houston dropped to $13.78/ton Friday, according to data from the Baltic Exchange. That’s the lowest since Jan. 22, exchange data show. Rates hit the lowest point this year Jan. 26, dropping to $12.39/ton, according to the exchange.
Industrial action at refineries in France have failed to lift rates, as inventories in the country remain well stocked, according to analysts. France’s prime minister has called meeting in a bid to end the refinery strikes gripping the country. Six out of France’s eight refineries are either shut down or producing greatly reduced levels of output as a result of blockades and strikes called by unions attempting to force the government to abandon its draft labor law. Strikes have affected all five of France’s Total-operated refineries, but production at both ExxonMobil plants has not been affected.
“Refinery outages in France have yet to impact product tanker spot market fundamentals,” said Wells Fargo Securities senior analyst Michael Webber in a market note. “(This is) due to … most notably the position list in the Atlantic Basin remains large (and) European product inventories remain elevated; Total has roughly two months of ULSD currently in storage.”
Barge operators are receiving more requests than usual to move refined oil products out of storage in the Amsterdam-Rotterdam-Antwerp trading hub for transport down the river Rhine to meet French demand, sources told OPIS this week.
