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Traders are scrambling to find oil products in Asia to ship to the United States and Latin America after Hurricane Harvey shut almost a quarter of US refining capacity. several trading and shipping sources told Reuters on Wednesday.
Many are also asking for ships to have a US option added to their original destination to allow for flexibility in sending the cargoes across the Pacific. shipbrokers said.
At least one oil products tanker. BW Kallang. is being diverted to Houston instead of New York after loading gasoline blending component alkylate from India. a source familiar with the matter said.
“Traders will try to keep discharge options open so that they are able to anticipate any potential delays in discharging the cargoes.“ a Singapore-based shipbrokers said.
The refinery disruptions in Texas will likely result in changes in product trade patterns. with more cargoes heading to the US to replace lost output. said Ralph Leszczynski. Head of Research at ship broker Banchero Costa in Singapore.
According to Goldman Sachs. about 4.1 million barrels per day (bpd). or 23 per cent. of refining capacity is now offline in the United States. Major pipelines carrying petrol. diesel and jet fuel have started adjusting deliveries or closing lines outright because of a lack of supply.
“The jet (fuel) market is crazy now with everyone asking for it suddenly.“ a Japanese refining source said.
Cash differentials for jet fuel loading in Japan or South Korea are trading at a discount of 10 to 30 cents a barrel to Singapore quotes. up from minus 40 to 45 cents a barrel a week ago. two North Asian refining sources said.
Singapore jet fuel cash differentials also rose to a more than one-month high. while the ultra-low sulphur diesel cash differential climbed to nearly a two-week high.
With limited spot availability in North Asia. traders are turning to Singapore for cargoes even though freight rates are typically higher. the trading and shipping sources said.
So far. traders have provisionally booked jet fuel from South Korea and Singapore to head to the US West Coast. while diesel is being booked to head to Latin America from Singapore. with enquiries trickling in for Indian cargoes.
