Return to Sender: Diesel Tankers Make Mid-Atlantic U-Turn as European Stocks Swell
By Ron Bousso and Libby George
LONDON, Dec 15 (Reuters) – Tankers laden with diesel heading from the U.S. Gulf Coast to Europe are turning round in mid-ocean as European storage is sort of stuffed to the brim.
At least three 37,000 tonne tankers – Vendome Street, Atlantic Star and Atlantic Titan – have made U-turns within the Atlantic ocean in current days and at the moment are heading again west, in keeping with Reuters ship monitoring.
It is unclear if the tankers will discharge their diesel cargoes within the Gulf Coast or will await new orders, in keeping with merchants and transport brokers.
“European prices are so soft,” one dealer mentioned. “Sellers must see better numbers.”
The Vendome Street was greater than three quarters of the best way to Europe, turning round simply 800 miles off the coast of Portugal. Ship brokers mentioned a turnaround so late within the journey would come at a price to the charterer.
European diesel costs and refining margins have collapsed in current days to six-year lows because the market has been overwhelmed by imports from large refineries within the United States, Russia, Asia and the Middle East.
At the identical time, unusually gentle temperatures in Europe and North America additional restricted demand for diesel and heating oil, ptting much more strain in the marketplace.
Gasoil shares, which embody diesel and heating oil, within the Amsterdam-Rotterdam-Antwerp storage hub climbed to a recent file excessive final week.
Prompt Low Sulphur Gasoil futures, the European diesel benchmark, have been buying and selling at sharp low cost to later contracts, in what is called contango, prompting merchants to retailer product.
In some circumstances, merchants opted to retailer product on tankers. At least 250,000 tonnes of diesel are at present anchored off Europe and the Mediterranean searching for a discharge port, in keeping with merchants.
“The idea is to keep tankers on the water as long as you can and try to find a stronger market,” a dealer mentioned. (Editing by William Hardy)
(c) Copyright Thomson Reuters 2015.
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