Over half of UK forecourts still face shortages as army goes in

The UK is sending in military personnel to help relieve the fuel crisis with more than half of forecourts facing shortages, despite traders and refiners reporting satisfactory stock levels.

Almost 200 military tanker personnel, 100 of which are drivers, will be deployed from Oct. 4 to provide temporary support as part of the government's wider action to further relieve pressure on petrol stations and address the shortage of HGV drivers, the UK government said.

A survey of 1,100 sites across the UK conducted by the Petrol Retail Association showed 26% of retail fuel forecourts are dry and 27% have only one grade in stock, Gordon Balmer, executive director of the PRA said in a statement Oct. 1.

While the government noted demand for fuel has stabilized throughout the week and more fuel is now being delivered than is being sold, it did say some parts of the country still face challenges.

The discrepancy between the squeeze at the petrol pumps and the normal deliveries at refineries is being seen in the market.

The Northwest European cargoes markets for gasoline and diesel has barely registered the spike in demand.

In the northwest European gasoline barge market, the Eurobob FOB AR barge was assessed Oct. 1 at $749.75/mt, edging lower on the day but with a $47.75/mt premium to the front-month Eurobob swap. There is robust prompt physical demand, but mostly within continental Europe, traders said.

Trade in delivered northwest European gasoline cargo market into the UK remained sluggish, sources said. This was partly due to the ultra-prompt nature of the uptick in demand but more attributable to wider market factors such as the steep backwardation in the market structure.

In the diesel market, cash differentials for CIF NWE ULSD cargoes have been trending downwards since the beginning of September, assessed at a $5.25/mt premium to the front month ICE LSGO futures contract Sept. 2, but falling to $2.25/mt by Oct. 1, with the market balanced but players drawing from their own storage rather than looking for fresh cargoes due to the backwardation in the futures market, according to traders.

Diesel cargoes delivered into the UK followed the same trajectory, assessed at an $8.25/mt premium to the front month ICE LSGO Sept. 2, falling to $5.25/mt Oct. 1, with the additional premium to CIF NWE cargoes purely reflecting a freight differential.

UK-based traders said the situation with diesel and gasoline storage tanks was normal and there were no shortages or gluts.

Normal deliveries from UK refineries

Haulage seemed less of the problem so much as customer behavior, according to traders. Storage tanks were receiving cargoes and supplying fuel stations at a usual rate, with the current shortages mostly because of the extra buying activity, traders said.

Panic buying boosted some ultra-prompt demand for gasoline imports into the UK, but traders saw this as short-lived.

Refineries said deliveries were proceeding as usual. A spokesperson for Petroineos' Grangemouth refinery said the plant is operating as normal and making fuels of all grades available for collection to the hauliers who use its road distribution center.

The Stanlow refinery continues to provide normal supply despite a strike threat, a spokesperson said.

A spokesperson for ExxonMobil, which operates the UK's largest refinery and an extensive underground pipeline network supplying its fuel distribution terminals, said all those operations continue as normal, with fuel production at the company's Fawley refinery unaffected and with strong supply to its distribution terminals.

"Despite the challenges faced on forecourts, the production and supply of fuels to our terminals is unaffected," the spokesperson said. "Our advice is for motorists to stick to their normal buying patterns," the spokesperson added.

The Prax Lindsey refinery also "has had no interruption to its production and has not been affected by the current logistics challenges," a spokesperson said, adding that it is continuing to work with partners and customers "to mitigate any impact of the driver shortage. "

This provides limited consolation to the forecourts, the PRA said.

"Whilst the situation is similar to recent days, there are signs that it is improving, but far too slowly. Independents which total 65% of the entire network, are not receiving enough deliveries of fuel compared with other sectors," the PRA's Balmer said.