[[{“value”:”
Tepid demand for diesel and other distillate products such as heating oil has had traders competing for storage tanks on the U.S. East Coast to wait out the current market weakness, Reuters reported on Tuesday, quoting data from storage broker The Tank Tiger.
Demand for distillate storage at New York Harbor has jumped to around 300,000 barrels in April, compared to no bidder interest in March, according to The Tank Tiger’s data that assesses interest in leasing storage tanks.
A warmer winter in the U.S. has left more heating oil supplies on the East Coast unused, while traders are also looking to store diesel there for future exports to Europe when European demand recovers later this year as we approach the next winter in the northern hemisphere.
Moreover, the diesel market in Europe is in contango, signaling ample supply and even oversupply. Contango is the state of the market in which prices for delivery at later dates are higher than front-month prices—hence, the incentive for traders to keep the product stored for future sales.
Early last week, the three-month contango in the European diesel futures hit its highest level since August 2021. With weak manufacturing and a warmer winter this year, there shouldn’t be worries about European diesel supply in the summer months. The strongest-performing fuel in the summer is typically gasoline as people drive more.
“The ICE gasoil crack is trading at its lowest level since last June, which has dragged down refinery margins. There have already been reports that some Asian refiners are cutting run rates in response to these lower margins,” ING strategists Warren Patterson and Ewa Manthey wrote in a Tuesday note.
Distillate demand in the U.S. also appears lukewarm, as the EIA estimated in its latest weekly report an inventory build of 1.6 million barrels in distillates for the week to April 19, with production averaging 4.8 million barrels daily. This compared with an inventory draw of 2.8 million barrels for the previous week when production averaged 4.6 million barrels daily.
Take the Survey at https://survey.energynewsbeat.com/
ENB Top News
ENB
Energy Dashboard
ENB Podcast
ENB Substack
The post Weak Diesel Demand Has Traders Hunting for East Coast Storage appeared first on Energy News Beat.
“}]]