Gasoline shipments to the U.S. from Europe are poised to drop this month after the profit from the trade tumbled to a six-week low.
U.S. gasoline was 1.1 cents a gallon cheaper than Europe’s on Dec. 6, the biggest discount since Oct. 21, based on futures for delivery to New York harbor and benchmark 95-octane grade fuel in the Amsterdam-Rotterdam-Antwerp region. It was 10.3 cents a gallon more expensive than Europe’s as recently as Nov. 29, the biggest premium since Aug. 9.
November’s price gain was “temporary,” said Roy Jordan, a London-based research consultant at Facts Global Energy. U.S. gasoline “demand has fallen versus last year,” he said.
European shipments of gasoline to the U.S. tripled last month as the lowest American inventories in a year drove up returns from buying in one market and selling in the other. That’s now evaporating as U.S. refiners step up processing rates after seasonal maintenance. Stockpiles of the fuel unexpectedly rose in the week ended Dec. 3, the Energy Department in Washington said yesterday.
The number of tankers chartered to ship gasoline to the U.S. Atlantic Coast rose to at least 29 in November, from 11 in October, according to data compiled by Bloomberg and Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker. The vessels carried 1.12 million metric tons, compared with 412,000 tons in October.
Gasoline for January delivery traded at $2.3587 a gallon on the New York Mercantile Exchange today, bringing the gain this year to 15 percent. It reached $2.3699 a gallon on Dec. 6, the highest price since May 4. In Europe, the fuel was at $813 a ton yesterday, or $2.2772 a gallon, for a 16 percent advance this year, according to data compiled by Bloomberg. It rose to $837 a ton on Dec. 6, a 26-month high.
In the U.S., the profit from turning crude into gasoline “fell as a result of the storage build and increased refinery runs,” reported by the Energy Department, JP Morgan analysts wrote in a research note.
The profit in Europe, the so-called crack spread, widened to $7.15 a barrel on Dec. 2, the most since Aug. 2 and more than triple the $2.35 reached on Nov. 9, according to PVM Oil Associates Ltd., an independent broker that handles more than 100 million barrels of oil derivatives a day. The spread was $5.50 today.
Gasoline has brought “some Christmas cheer to the refiners,” said Jordan.
Refining margins may still decline as the cost of crude increases, according to Torbjoern Kjus, senior oil market analyst at Oslo-based bank DnB NOR. Oil has gained almost 12 percent this year and traded above $90 a barrel on Dec. 7 for the first time in more than two years.
‘Crushed by Crude’
“A weak sign here is that margins are not keeping up with flat price movements,” Kjus said. They are “starting to get crushed by the crude strength in Europe and the U.S.”
U.S. inventories rose 3.81 million barrels to 214 million in the week ended Dec. 3, the Energy Department said yesterday. They were forecast to decline by 300,000 barrels, according to the median of 17 analyst estimates in a Bloomberg News survey. Stockpiles were 207.7 million barrels in the week ended Nov. 12, the lowest since October last year.
European producers boosted production last month to make up for stoppages caused by strikes in France that shut nine of the country’s 11 refineries. Oil companies lost 230 million euros ($304 million) from the action, according to Union Francaise des Industries Petrolieres, a Paris-based industry group.
Gasoline inventories in independent storage fell to 482,000 tons in the week through Nov. 25 in the Amsterdam-Rotterdam-Antwerp region, Europe’s oil-trading hub, the lowest level since Oct. 2, 2008, according to PJK International BV, an Oosterhout, Netherlands-based petroleum-industry researcher.
The cost of shipping gasoline from Europe to the U.S. Atlantic Coast rose to Worldscale 213.75 today, or about $16,254 a day after fuel costs are taken into account, according to the London-based Baltic Exchange. The rate was at 214.17 on Dec. 6, the highest since July 20.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 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.
The fixtures from London-based Clarkson were drawn from single-voyage bookings. Long-term charters weren’t included.