Europe ships heating oil to U.S. despite stock worries

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Europe ships heating oil to U.S. despite stock worries

London | Reuters | 10-11-00 Europe is sending heating oil to the United States in search of better profits despite serious concerns at low European inventories this winter, trading sources said yesterday. Traders saw at least three cargoes of Russian 0.2 per cent sulphur heating oil - approximately 250,000 tonnes - currently heading transatlantic and said more would follow if the Europe to U.S. arbitrage remained open.

"If the U.S. pays more and if prices here are so low, we can afford to give oil away," a gas oil trader at a U.S. trading house said. "I don't know if stocks are low or not, but the way prices are at the moment it doesn't look like people need to keep gas oil here." Two of the export cargoes were said to be bound for New York while one or two others will head for Brazil. Earlier yesterday, the Paris-based International Energy Agency said there was "serious concern" about the level of heating oil and diesel inventories in the industrialised world. The IEA said stocks needed to be replenished before the arrival of peak winter demand.

European distillate stocks - which include heating oil, diesel and jet fuel - remained 44.74 million barrels below 1999 levels in September, while end-user stocks in the key German market are assessed by traders to be around 60 per cent. But despite concerns that Europe is unprepared for the winter, European demand has remained thin - a fact traders attribute to mild weather and high international oil prices. The U.S. is considered to be better prepared for the season ahead and several key U.S. refiners have agreed to stop exporting distillate fuel to Europe regardless of profitability.

Meanwhile, Europe will export about one million tonnes of gasoline or 250,000 barrels per day (bpd) to the United States this month as producers take advantage of an open arbitrage, traders said yesterday. One said that as of last week, about 700,000 tonnes had been loaded in Europe to arrive in the U.S. between end-October and mid-November. Most of this total came from northwest Europe (NWE) and the rest from the Mediterranean. Another trading source said 300,000 tonnes of gasoline was going to the U.S. from the NWE in the latter part of November and 300,000 tonnes from the Mediterranean was leaving around the middle of November.

European exports to the United States helped to push New York harbour gasoline cash differentials down by four to five cents a gallon on Wednesday as the U.S. market reacted to rising import volumes. The 250,000 bpd of gasoline to be sent from Europe to the U.S. during November compares to normal total U.S. imports from all sources of around 250,000 to 300,000 bpd.

The U.S. normally builds up gasoline stocks by late November/early December ahead of the following spring. According to the American Petroleum Institute, of the 8.4 million bpd consumed by American drivers in 1999, 157,000 bpd came from Europe.

http://www.gulf-news.com/Articles/news.asp?ArticleID=2309

-- Martin Thompson (mthom1927@aol.com), November 10, 2000


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