May 26, 2016 [OPIS] - Industrial action at oil refineries in France has made it profitable for tankers to ship distillate oil cargoes to Europe from the U.S., according to Wells Fargo Securities.
Strike action at six of France’s eight refineries have boosted cargoes in the Atlantic, even as a surplus of ships available for hire in the U.S. Gulf have weighed on rates to Europe, senior analyst Michael Webber wrote in the Wells Fargo Shipping Weekly today.
The French government has announced strategic stocks held across 100 sites in largely remote locations such as the Alps are being drawn down to resupply petrol, or gasoline, pumping stations. Forty percent of petrol stations in Paris have now been affected by the refinery strikes amid panic buying, the government said. Up to 20% of France’s 12,000 petrol stations are said to be facing supply difficulties.
“French refinery strikes have opened the U.S. Gulf-Europe distillate arb, improving product tanker volumes in the Atlantic Basin,” Webber wrote in the report. “A currently large position list in the U.S. Gulf has kept rates capped near $7,000/day. Looking forward, market participants expect volumes to remain firm as refinery output continues to ramp in preparation for Atlantic Basin gasoline stockpiling, with French refinery strikes adding further upside.”
Rates for Medium Range oil tankers hauling 38,000 metric tons of refined oil products such as ultra-low-sulfur diesel between Houston and Amsterdam fell 3% to $14.11/metric ton today, according to data from the London-based Baltic Exchange.
