Gasoline Cargoes to U.S. Set to Gain as Refinery Maintenance Crimps Supply

Gasoline shipments across the Atlantic Ocean will be at the highest level since June over the next two weeks on declining production from U.S. refineries and excess inventories in Europe, a survey showed.

Thirty-one tankers were booked or are due to be chartered for loading in the period, according to the median estimate in a Bloomberg News survey of four shipbrokers, one owner and two traders yesterday. That’s the highest number since at least June and one more cargo than last week, previous survey data show.

U.S. refineries step up maintenance in the final weeks of September and the first weeks of October to get ready for more production of winter fuel. ConocoPhillips is idling operations at its 185,000-barrel-a-day refinery in Trainer, Pennsylvania, and will close the plant permanently if a buyer isn’t found. The East Coast had 1.62 million barrels a day of operable capacity as of June, according to the Energy Department. Gasoline rose as much as 1.2 percent today to $2.6835 a gallon on the New York Mercantile Exchange.

The “U.S. refinery maintenance period is late September early October as they switch from summer gasoline production to heating oil in the winter, so this reduction in output could certainly result in more gasoline cargoes sourced from Europe,” Jonathan B. Chappell, managing director, research, at New York- based Evercore Partners Inc., said today by phone.

An excess of gasoline stocks in northwestern Europe can also spur more shipments of the auto fuel to the U.S., according to Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.

Supply Push

“If Europe develops an additional surplus of supply, you could also have a supply push,” London-based Tchilinguirian said today by phone. U.S. gasoline inventories gained 791,000 barrels to 214.9 million in the week ended Sept. 23, the Department of Energy said.

Of the 31 vessels, known in the industry as medium-range tankers, 16 have already been booked and 15 will probably be hired, according to the survey. They will be able to carry about 9.8 million barrels of gasoline, or 700,000 barrels a day over the next two weeks. The daily rate is 83 percent of the 839,000 barrels the U.S. imported over the past year, the department said.

The October forward contract for the Northwest Europe to U.S. East Coast freight route advanced 23 percent yesterday to $9,634.25, according to data from Marex Spectron. That’s the highest since June 24, the data show.

Participate in Rally

“The list of available ships looks very tight up to Oct. 5, and we still have quite a few cargoes to cover,” Will Leslie, head of tanker derivatives at broker ACM-GFI in London, said by e-mail yesterday. “On the back of this, we’ve seen a huge amount of interest, as people have scrambled to adjust positions and participate in the rally: it’s been very busy and volumes have been high.”

As a result, there are 23 vessels likely to be available to carry trans-Atlantic gasoline cargoes, five less than the same period a month earlier, the survey showed.

Daily rental income for tankers carrying gasoline across the Atlantic decreased 7.4 percent today to $12,423, according to the Baltic Exchange in London. That’s about a six-fold increase from the 2011 low reached Sept. 8.

The survey is based on so-called single-voyage, or spot, charters and excludes loadings under longer-term contracts. It assumes shipments to the U.S. East Coast from northwestern Europe. Each tanker would normally haul about 37,000 tons of cargo, or 315,000 barrels.

Charter rates on the route declined 2.9 percent to 180.21 industry-standard Worldscale points today, according to the exchange.

The points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

To contact the reporter on this story: Robert Sheridan in London at rsheridan6@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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