London — Distillate volumes heading to Northwest Europe and the Mediterranean from the US Gulf Coast for January are currently at 920,000 mt, according to data from S&P Global Platts' trade flow software cFlow.
The current figure is more or less the same as last January's volume despite a difficult arbitrage from the US to Europe at the moment as result of a strong US Atlantic Coast market for heating oil.
One LR2, one LR1 and two medium range tankers were seen to leave the USGC in the last seven days.
LR2s are relatively uncommon in the USGC compared to LR1s as only a limited number of ports in the region can accommodate them.
All of the vessels that left were heading to the Amsterdam-Rotterdam-Antwerp hub, as the Mediterranean market for ultra low sulfur diesel is still sufficiently well supplied to the point of weakness, leaving little option for the volume beyond Northwest Europe.
Among the vessels currently on the water is one MR vessel, the Stealth Falcon, that is likely to be carrying gasoil to Algiers in Algeria, after loading in Houston, although this trans-Atlantic arbitrage was still not considered workable by gasoil traders in Europe.
The lack of gasoil volumes being produced at local Mediterranean refineries, coupled with a strong demand for gasoil grades across the region over the winter months, has exacerbated recent market tightness in the Mediterranean.
Furthermore, North African demand for gasoil has been relatively strong, with Algeria's Sonatrach tendering for six cargoes of 0.1% gasoil over January. Details around the tender volumes for February remain unconfirmed.
Given the lack of availability of finished gasoil grades, traders have had to look to other supply streams and seek opportunities to blend components, including 10 ppm diesel, that are available.
"Supplying this with a combination of blended cargoes, and some Black Sea vols and US vols. All a mixture," one gasoil trader in Europe said.
--George Shaw, george.shaw@spglobal.com
--Ahila Karan, ahila.karan@spglobal.com
--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com