USGC VGO falls $1/b on incoming European, Venezuelan barrels: trade

miércoles 22 de julio de 2015

Houston-bound cargoes of vacuum gasoil from Europe and Venezuela went on offer Wednesday, with the expectations of a build in inventories already dragging VGO differentials lower, sources said.

US Gulf Coast VGO barges at maximum 0.5% sulfur were heard talked at $15/b over cash-market August WTI late Wednesday morning, down $1 compared with Tuesday's assessment. VGO at maximum 2% sulfur also dropped $1 and was heard talked at $14/b over August WTI.

The cargoes are removing support from a Gulf Coast feedstocks market in which VGO had been rising at 29 cents/day since late June, sources said.

"We're starting to see a lot of offers come in on the Europe product with those boats on the water," a US feedstocks broker said. "The offers are starting around the high $15s. We'll probably see some more definition on that in the next few days."

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The VGO on the vessels sailing out of Europe was heard offered at $15.75/b over cash WTI and bid at plus $15/b, sources said.

"That's already having an impact on the barge market, and we'll probably see it come off some more," a second US feedstocks broker said.

European trading houses and refiners have sought to send up to 15 cargoes of VGO to the Gulf Coast this month to take advantage of high VGO differentials, which have been boosted by strong Gulf Coast gasoline cracks and unseasonably high refinery runs.

The second broker said said two cargoes of VGO also have been sent from Venezuela, including one chartered by Lukoil that was heard Wednesday on offer at $15/b over cash WTI.

The aniline and nitrogen specifications on the Lukoil VGO cargo do not meet the levels traditionally traded in the Gulf cash market, the second broker said.

"I think he might have a little trouble selling that one, especially with all the barrels coming from Europe right now," the second broker added.

It was unclear Wednesday who the charterer of the second Venezuelan cargo was.

Vessels bound for Houston with VGO aboard include the Minerva Lydia, which sailed from Rotterdam with Shell as the charterer on July 4. It was south of Mobile, Alabama, Wednesday morning and was expected to begin unloading VGO onto barges off Louisiana sometime this week, according to Platts cFlow ship-tracking software.

US Energy Information Administration data released Wednesday supports the narrative of a market that might induce VGO imports.

Gulf Coast refinery runs of 96% in the week that ended July 17 topped the 20-week average of 93.7% by some margin and were 1 percentage point above runs at the same time a year ago.

Stronger cracks are also supporting VGO, which is fed into refinery crackers to make gasoline and other refined products. The crack for a barrel of 87-unleaded gasoline at 7.8 RVP over a barrel of Louisiana Light Sweet crude has topped $25 for 16 consecutive trading days. In contrast, the crack never topped $25/b at all in 2014.

Low-sulfur VGO in the Gulf Coast has risen $5.75/b since June 24 to Tuesday's assessment at WTI plus $16/b.