Waterborne US Gulf Coast gasoline volumes up as Latin demand set to return

New York — Although the amount of gasoline floating along the US Gulf Coast in tankers is rising, the volume of gasoline in floating storage is declining, pointing to increasing exports to Latin America as preventative coronavirus lockdowns there begin to ease.

The South American gasoline export market is key for US Gulf Coast refiners, as regional demand there outpaces refinery capacity. The complex, sophisticated USGC plants have depended on that demand to keep their refinery utilization at over 90% capacity for much of the last six years.

The shutdown of South American countries to prevent the coronavirus spread is lagging that of the US, so USGC refiners have faced a fall-off in demand in both markets.

Total US gasoline exports fell to 210,000 b/d for the week ended May 22, down from the 244,000 b/d the week earlier, according to Energy Information Administration data. This is well below the 3.276 million b/d of total US gasoline exports in 2019, and about 85% of that comes from the USGC.

Still, exports are expected to tick higher. S&P Global Platts Analytics expects to see gasoline exports to reach 290,000 b/d for the week ended May 29.

According to commodity tracker Kpler, there was 2.06 million barrels of gasoline on the water in the US Gulf Coast for the week beginning May 25, up from 1.06 million barrels the week earlier.

However, over that same period, volumes of gasoline on the water for longer than 7 days dropped by 30,000 barrels to 95,000 barrels as vessels began to move south.

Steps towards demand recovery

Government actions across the globe to lock down economic activity caused a global product stock build of 6 million b/d in April. The build "was quite tremendous," according to Rick Joswick, head of trade flows and pricing at S&P Global Platts Analytics.

Joswick said that as restrictions ease and governments reopen facilities, and demand begins to recover, refiners will be start increasing refinery runs, and "stop building product stocks and start drawing product stocks."

Further, as Latin America begins to reopen, countries seek to ensure adequate gasoline supply.

For example, Argentina refineries like Raizen and Bahia Blanca have already begun restart operations even though Argentina has extended its economic lockdown to June 7. Argentina shut its economy on March 20 and saw an almost 67% decrease in gasoline demand in April.

S American floating storage dropping

A drop in floating storage volumes also points to an increase in demand.

Gasoline stored on water off the West Coast of South America is falling, with just 57,800 barrels off the coast for the week beginning May 18 compared with the 1.034 million barrels for the week ended April 25, according to Kpler.

Gasoline stored on water off the East Coast of South America fell to 1.23 million barrels for the week beginning May 25 from 4.16 barrels for the week beginning April 20.

In the key storage hub of the Caribbean, volumes of gasoline on the water has declined to 1.26 million barrels for the week beginning May 25, down from the 3 million barrels for the week beginning April 6. However, of this, gasoline on the water longer than 7 days declined to 30,000 barrels for the week beginning May 25 down from 61,000 barrels for the week beginning May 11.