US Traders Seek Oil Product Cargoes from N.Asia After Harvey -Sources

SINGAPORE, Aug 28 (Reuters) - U.S. traders are looking to import oil product cargoes from North Asia to the United States after Hurricane Harvey forced refineries across the U.S. Gulf Coast to shut down, refining and shipping industry sources told Reuters on Monday.

At least two North Asian refineries have been approached by refineries and traders in the United States seeking prompt jet fuel and diesel cargoes, two sources close to the matter said, declining to be named because they are not authorised to speak to media.

Singapore complex refining margins are already at their highest August level in five years as peak summer demand and refinery outages lift prices.

The Asian gasoline margin hit a more than one-year high on Monday while the naphtha margin registered a six-month high, Reuters data showed.

The most powerful hurricane to hit Texas in more than 50 years has resulted in the deaths of at least two people, caused severe flooding and forced the closure of Houston port and several refineries.

"Should these levels of outages remain in place, and using past hurricanes as proxies for the impact on oil demand, we roughly estimate that the impact of Harvey on the U.S. oil market would be to increase domestic crude availability by 1.4 million barrels per day (bpd) while removing 615,000-785,000 bpd of gasoline and 700,000 bpd of distillate supplies," Goldman Sachs analysts said in a note.

"Larger refinery outages would increase these long crude and short product impacts."

Refiners and United States-based traders are looking for prompt-loading diesel and jet fuel from North Asia, but there are limited cargoes available, the two refining sources said.

"The market in Asia is very tight, so we had to turn them away as our cargoes have been committed," one of the sources said.

This might mean that U.S. traders have to seek oil product cargoes from traders in Asia, likely paying higher prices, which could drive up spot prices in Asia, the second source said.

Asia is the most likely supplier of diesel and jet fuel cargoes to the United States because Europe is typically short of middle distillates. A recent spate of refinery incidents in Europe has also drawn down inventory of the fuels there.

Some 275,000 tonnes of oil products comprising mainly jet fuel had been provisionally fixed on vessels from Japan and South Korea to head mainly to the west coast of United States before to the storm, one Singapore-based shipbroker said, with more enquiries being made.

The arbitrage to ship diesel and jet fuel from Asia to the United States remains unprofitable as of Monday, but things could change, with prices in America expected to climb further, said one Singapore-based trading firm analyst who declined to be named because he is not authorised to speak to media.

For gasoline and naphtha, traders expect the United States and Latin America to draw on Europe's ample supplies instead of Asia. U.S. liquefied petroleum gas (LPG) shipments to Asia have been disrupted by the closure of the Houston shipping channel, an LPG trader said.