Europe is preparing to receive American diesel fuel this month, while its imports from Asia and the Middle East will witness an overall decline as the continent seeks to obtain alternatives to Russian fuel this winter.
Diesel and gasoil imports from the United States to the European Union and the United Kingdom could jump to more than 290,000 barrels per day, according to early estimates drawn from data from analytics firm Kpler and compiled by Bloomberg. This will be the largest amount since July 2018.
Completion of maintenance work
Exports from the US Gulf Coast rose as refinery maintenance was completed in the fall, increasing supplies. Meanwhile, shipments to destinations in Latin America were affected by worsening bottlenecks in the Panama Canal, creating an incentive for shipping to Europe.
Kpler said in a report: The increase in supply due to the exit of US Gulf Coast refineries from the maintenance season in the fall was offset by strong domestic demand and high demand for exports to Europe and Latin America.
Diesel exports from the region to Europe fall to their lowest level in 11 months
The December estimates include ships sailing from the US Gulf Coast and some cargo scheduled to sail in the coming days. Imports may be adjusted upward if shipments are observed to increase during the month.
Diesel shipping prices from the US Gulf to Europe rose last month in line with increased exports from the region. A tanker bound for Panama was also diverted to Europe amid delays in transit through the canal.
However, overall diesel and gasoil imports into Europe from external suppliers are likely to remain weak this month. The initial observed fuel shipments to the European Union and the United Kingdom this month amount to about 705 thousand barrels per day. This is the lowest monthly volume according to Kepler data since at least the beginning of 2017.
Middle East supplies decline
The increase in shipments from the Americas is likely to be offset by a decline in flows from Asia and the Middle East, where extensive refinery maintenance is underway. While a small number of cargoes can still sail from the Middle East and complete their journey to Europe before the end of the month, any additional volumes are expected to be limited.
While higher supply following the end of Europe's refinery maintenance season should, coupled with weaker demand, lead to an increase in continental European gasoil and diesel balances, we expect them to remain below normal in December, Kpler said.
