As French Refinery Strikes Worsen, Little Sign of Diesel Influxby
Rising U.S. consumption helps counter-seasonal inventory draw
Cross-Atlantic diesel cargoes poised to drop to two-month low
As French oil refineries grind to a halt and hundreds of retail fuel-stations face shortages, there are few signs of a flood of supply from overseas to replenish the nation’s diminishing diesel inventories.
Traders are poised to send the fewest tankers since March to deliver U.S. diesel and similar fuels to Europe, according to a Bloomberg survey of people directly involved in such shipments. None that have been hired are bound for France, the world’s biggest importer, lists of charters and ship tracking show.
Workers at the port of Le Havre in Normandy, the key import facility in northwest France, voted on May 20 to stop unloading oil, joining an action that’s curbed the nation’s own refining and is now spreading to power generation. At Marseille, in the Mediterranean, 29 tankers were blocked as of Wednesday.
“In the end, we would expect a resupply bid out of France but not until the strike is over,” Robert Campbell, head of oil products research at Energy Aspects Ltd., said by phone from New York on Thursday. “If you were a French buyer and you picked up a cargo and you brought it to Le Havre and you couldn’t discharge it, you would be on the hook for all the demurrage, so there’s a huge disincentive to buying with that uncertainty.”
Demurrage is a waiting fee that traders sometimes have to pay to ship owners when cargo deliveries take longer than expected.
There are five charters either booked or anticipated for shipment to Europe from the U.S. in the next two weeks, the fewest since March and barely half the normal level of the past year, weekly surveys compiled by Bloomberg show. Such shipments would also lose traders about $15 a ton, or $570,000 for a standard-sized cargo, based on the difference between the price of the fuel in the U.S. and Europe less the cost of freight, data compiled by Bloomberg show.
As well as a reluctance to ship cargoes to France, the U.S. is also working through its own glut of diesel. Inventories of distillates, the category including diesel and heating oil, have declined for seven straight weeks, according to data from the Energy Information Administration. Domestic demand is 5 percent higher than the five-year average for the time of year.
While France’s refinery output may be curbed by strikes, inventories remain high in the Netherlands and Belgium, Europe’s trading hub. Independently held stockpiles of gasoil in Amsterdam, Rotterdam and Antwerp, at 3.2 million metric tons, are the highest for the time of year since at least 2007, data from PJK International show.