US Fuel Exports Recover After Harvey, Offering Buyers Respite
LONDON/HOUSTON, Sept 27 (Reuters) - Fuel exports from the U.S. Gulf Coast are rising rapidly as refineries recover from weeks of disruptions due to Hurricane Harvey, offering respite to buyers in Latin America and Europe.
The gradual resumption of operations in the region that has become a major oil export hub has prompted a drop in benchmark gasoline and diesel refining margins on both sides of the Atlantic. Margins measure the profit from converting crude into fuels.
Mexico's state-run oil company Pemex bought gasoline cargoes from the U.S. Gulf Coast this week, according to shipping data, after sourcing dozens of cargoes from Europe, the Middle East and Asia through the month.
Mexico, which relies on imports for half of its gasoline consumption, typically buys two cargoes of the road fuel per day, mostly from the U.S. Gulf Coast.
U.S. outages came at a particularly difficult moment for Mexico as its largest refinery, the 330,000 barrels per day (bpd) Salina Cruz plant, was halted after an earthquake this month. It 190,000 bpd Ciudad Madero refinery was also undergoing maintenance.
"The fuel supply is very complicated for Mexico right now. Two refineries are completely halted and several Texas ports are working with restrictions, so Pemex is looking for cargoes everywhere," a trader exporting U.S. diesel to Mexico said.
Similarly, diesel and gasoline exports from the Gulf Coast to Brazil were slowly recovering.
About 10 tankers with cargoes of diesel have also been booked to sail to Europe this week, according to shipping data.
That followed around three weeks of almost no activity on the transatlantic route which is a vital source of supply for Europe.
"Slowly but surely exports from the U.S. Gulf are coming back as more refining capacity returns," a European trader said.
U.S. refineries increased crude runs last week by 1 million barrels per day to 88.6 percent of total capacity, the highest rate since Harvey hit on Aug. 25, according to weekly data from Energy Information Administration.
Harvey knocked out more than 4 million bpd of refining, nearly a quarter of total U.S. capacity.
Several refineries are still starting up, including Motiva Enterprises's 603,000 bpd refinery in Port Arthur, Texas, the country's biggest.
While product refining margins come under pressure, strong overseas demand are expected to support Gulf Coast refining profits.
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