Refined product futures were lower Monday as Hurricane Irma moves north along Florida's Gulf Coast.
The NYMEX front-month RBOB contract settled down 1.31 cents/gal at $1.6345/gal, while the front-month ULSD contract fell 2.30 cents/gal to settle at $1.7427/gal.
Irma did not cause any damage to the limited oil infrastructure in Florida, which consists primarily of ports and storage terminals, but sparked concerns about depressed refined product demand.
Goldman Sachs analysts said Monday in a note that the recovery in refinery runs and trade flows was taking longer than had been expected.
After rising because of evacuations, gasoline demand will fall for two weeks and perhaps longer because of residual flooding, with the average loss attributed to Irma at 250,000 b/d for the next month, Goldman said.
Fuel terminals in the ports of Tampa and Port Everglades have reopened and distributors were working Monday to restock thousands of stations drained of fuel during last week's massive evacuation.
Platts cFlow trade flow software shows two refined products vessels scheduled to arrive in Tampa this week. The tanker Florida and tanker Louisiana are both scheduled to arrive Wednesday and make regular runs between Louisiana and Florida.
The West Virginia is due to arrive in Tampa on Thursday, having left the New York area seven days ago.
Several other refined products vessels are scheduled to unload at Port Everglades this week, including the Mare Pacific on September Tuesday, the Overseas Nikiski on September Thursday and the Mt Sea Halcyone on September Friday, according to cFlow.
The Mexican Gulf Coast ports of Tuxpan, Veracruz, Tampico, Pajaritos, and Cayo Arca are all currently operating after being closed last week ahead of the arrival of Hurricane Katia, data from Pemex showed Monday.
The port of Tuxpan was closed September 6 ahead of Katia, which made landfall over the weekend.
Data from Platts cFlow showed several refined products vessels near Tuxpan Monday. The Largo Sun appeared to be offloading refined products. That vessel in late August had loaded at the IMTT terminal in Bayonne, New Jersey. Mexico at the time was sourcing refined products from outside of US Gulf Coast refineries, many of which were shut because of Hurricane Harvey.
A supply shortage for fuel on the US Atlantic Coast because of Hurricane Harvey has spurred a wave of gasoline imports into the region, though the open arbitrage will likely be short-lived. In the last two weeks there have been 18 cargoes carrying refined products headed to the USAC from Europe, the most over a 14-day period since April, according to Platts cFlow.
James Miller, spokesman for the Florida Petroleum Marketers and Convenience Store Association, Monday said the industry was focused on distributing incoming fuel cargoes and restoring power to restart gasoline pumps. "We expect fuel to be running in trucks from both locations shortly and getting to those areas in need ASAP," Miller said, referring to Tampa and Port Everglades. "We're also coordinating which areas of the state have power and which don't in terms of shipping fuel to those that are operational." Florida depends on barge shipments rather than pipelines for 97% of its refined products. It aims to keep seven days' worth of gasoline in storage at all times, according to the fuel distributors group.
Distillates flows from the US Gulf Coast to Northwest Europe and the Mediterranean remain more or less at a standstill, with only one vessel seen heading trans-Atlantic in the last seven days as the US refining hub recovers from the effects of Hurricane Harvey.
Latin America is taking most of what is being produced out of the USGC -- primarily 10 ppm ultra low sulfur diesel -- which will exacerbate tightness in the European market. At least three LR1 vessels have loaded in the USGC destined for Latin American ports in the past seven days, along with a slew of MR-size vessels.
President Donald Trump Friday waived Jones Act requirements to address a potential fuel shortage in Florida caused by Irma.
Elaine Duke, the acting secretary of the Department of Homeland Security, signed a waiver which will allow gasoline and other refined products to move between US ports on foreign-flagged vessels until the end of this week.
The waiver is needed to "facilitate" shipments of refined petroleum products, including gasoline, diesel and jet fuel, from ports in New York, Pennsylvania, Texas and Louisiana to South Carolina, Georgia, Florida, and Puerto Rico.
The Jones Act is a law that requires vessels transporting goods between US ports to be US-flagged, US-built and majority US-owned.
PORTS AND TERMINALS
NuStar Energy's plans to assess the damage caused last week by Hurricane Irma to its crude oil and refined products storage terminal in the Caribbean island of St. Eustatius have been put on hold as it prepares for yet another hurricane.
Storage tanks and other equipment at the company's 14 million-barrel terminal were hit by Irma last week.
Besides storage, the St. Eustatius terminal also has six mooring locations that are capable of handling vessels of up to 520,000 dwt, which means it can serve VLCC and ULCCs, typically with a capacity of over 2 million barrels.
Hurricane Jose is now looping eastward some 300 miles east of Florida and is expected to head west and reach Bahamas by Saturday morning, according to the National Hurricane Center.
The Mexican Gulf Coast ports of Tuxpan, Veracruz, Tampico, Pajaritos and Cayo Arca are all currently operating after being closed last week ahead of the arrival of Hurricane Katia, data from Pemex showed Monday. The port of Tuxpan was closed September 6 ahead of Katia, which made landfall over the weekend.
Fuel terminals in the ports of Tampa and Port Everglades, Florida, have reopened, and distributors were working Monday to restock thousands of stations drained of fuel during last week's massive evacuation.
Buckeye Partners shut down its Yabucoa, Puerto Rico, facility last week ahead of Irma. That terminal has around 4.6 million barrels of storage capacity for crude, fuel oil and refined products.
ExxonMobil Monday said it was still in the planning phase of restarting its 362,300 b/d Beaumont, Texas refinery.
Roughly 1.03 million b/d of refining capacity remains down, while another 2.7 million b/d of capacity is in the process of returning. Assuming the returning refineries are operating at 50% of capacity, the total downed capacity comes to roughly 2.38 million b/d, or 12.8% of US capacity.
Full shutdown:Company Location Capacity (b/d)
ExxonMobil Beaumont, TX 362,300
Buckeye Corpus Christi, TX 50,000
Magellan Corpus Christi, TX 50,000
Shell Deer Park, TX 340,000
Total Port Arthur, TX 225,500
Total capacity closed 1,027,800
Share of US capacity 6%
Partial shutdown/returning:Company Location Capacity (b/d) 50% of Capacity (b/d)
ExxonMobil*** Baytown, TX 560,500 280,250
Flint Hills*** Corpus Christi, TX - West 230,000 115,000
Flint Hills*** Corpus Christi, TX - East 70,000 35,000
Motiva*** Port Arthur, TX 603,000 301,500
Valero*** Three Rivers, TX 89,000 44,500
Lyondell*** Houston, TX 263,776 131,888
Marathon*** Galveston Bay, TX 459,000 229,500
Marathon Texas City, TX 86,000 43,000
Valero*** Houston, TX 191,000 95,500
Valero*** Port Arthur, TX 335,000 167,500
Petrobras*** Pasadena, TX 112,229 56,115
Phillips 66*** Sweeny, TX 247,000 123,500
Total capacity reduced 1,350,753
Closed + reduced capacity 2,378,553
Share of US capacity 12.8%