Shale Slowly Choking Off Historic Gasoline Trade
(Bloomberg) -- The rise of U.S. shale oil is choking off a historic gasoline trade, dealing a blow to European refineries that for decades have relied on American drivers to buy their excess supplies.
Over the past month, tankers shipping European gasoline to the world’s biggest consumer detoured to Venezuela and Caribbean islands. There’s even been a rare jump in shipments in the opposite direction. Imports from Europe fell to the lowest since November earlier this month and remain well below last year, according to customs data and ship-tracking.
A surge in U.S. shale oil production, which is rich in gasoline, is a major contributor to the diminished flows because refineries are running the hardest in more than 15 years. That’s led to a fundamental shift in the nation’s stockpiles of the road fuel, now at their highest seasonally since at least 1990, thereby depressing demand for resupply from Europe.
"Shale oil production is going through a dream phase and the U.S. is going to make more gasoline,” said Olivier Jakob, managing director at Petromatrix GmbH. The slump in cross-Atlantic flows is being caused by a combination of more shale oil refining and weak demand in the U.S., he said.
Alternative Markets
So far, Europe’s refiners have managed to send a little more to alternative markets like Latin America, West Africa, the Middle East, Asia and as far away as even Australia, although Jakob says those markets are oversupplied too.
Gasoline shipments and blending components to Asia from Europe jumped more than 80 percent to about 70,000 barrels a day this month from December, while exports to the Middle East are at their highest since October, according to preliminary data from oil analytics and tanker-tracking firm Vortexa.
And those markets are only going to become increasingly competitive, particularly with China exporting more last year -- and adding refining capacity in 2019 -- to add to regional supplies.
Tougher Times
That’s bad news for Europe’s gasoline exporters, whose main market is becoming tougher. Average U.S. gasoline production surged by more than 800,000 barrels a day between 2014 and 2018, according to U.S. Energy Information Administration data.
All that is starting to affect flows. Vortexa observed at least two tankers hauling U.S. Gulf gasoline and/or components to the European trading hub of Amsterdam, Rotterdam and Antwerp in November and December. In October, U.S. shipments of finished gasoline to the Netherlands spiked, according to EIA figures.
“We would see good chances for volumes and economics on this route to stay somewhat depressed given the oversupplied Atlantic situation,” said Neil Crosby, lead downstream analyst at JBC Energy GmbH. “You know there is an unusual situation when the U.S. begins to send gasoline to European gasoline export hubs like ARA.”
--With assistance from Michelle Kim.To contact the reporters on this story: Prejula Prem in London at pprem1@bloomberg.net ;Jack Wittels in London at jwittels1@bloomberg.net To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Rachel Graham
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- UK Oil Regulator Publishes New Emissions Reduction Plan
- PetroChina Posts Higher Annual Profit on Higher Production
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- McDermott Settles Reficar Dispute
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil Demand Outpaces Expectations, Testing Calculus on Peak Crude
- House Passes Protecting American Energy Production Act
- TotalEnergies Restarts Production in Denmark's Biggest Gas Field
- USA Oil and Gas Job Figures Jump
- Republican Lawmakers Say IEA Has Abandoned Energy Security Mission
- Blockchain Demands Attention in Oil and Gas
- Houthis Warn Saudi Arabia of Retaliation If It Backs USA Attacks
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- Summer Pump Prices Set to Hit $4 a Gallon Just as Americans Hit the Road
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Equinor Makes Discovery in North Sea
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension