Oil & Gas
Added Sep 25, 2020

Too much supply for US east coast gasoline market?

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The diversion of a gasoline blending component cargo away from the New York hub this week is just one signal that could foreshadow a weaker transatlantic pull for European gasoline/blending cargoes in coming weeks, following expected multi-week high arrivals in the week ending 2 October.

Signals of a weaker market to come?

  • MR-tanker Challenge Prospect 2 loaded out of Spain's Tarragona terminal on 24 September, and declared for New York - albeit briefly -  before switching to Amsterdam as its destination. 
  • Such a move is consistent with the recent volatility in the transatlantic gasoline arb, which had turned negative on 18-22 September.
  • Looking ahead to the EIA week ending 2 October, Vortexa estimates around 710,000 b/d gasoline and blending components arriving into PADD 1 on a preliminary basis - a sharp 25% increase vs. the prior week. It would be the highest weekly import level since end-July.

PADD1 Gasoline

PADD 1 Gasoline/Blending Component Imports - DOE week (b/d)

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  • There's further volume upside for the week ending 2 October from short-haul cargoes loaded out of Canada's east coast that may arrive before the end of the reporting period in seven days. 
  • But the diversion of the reformate cargo this week, amid growing uncertainty of the transatlantic arb, could foreshadow a coming slowdown or reversal in the East Coast gasoline inventory draw. This also depends on how regional demand and pipeline arrivals from PADD 3 influence the balance.

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