* US boosts fuel cargoes to Europe as France strikes
* US diesel exports rise 20 pct to over 600,000 bpd-source
* Chevron among cos chartering Europe-bound tankers
* French port and refinery stoppages boost import demand
By Joshua Schneyer and Jeffrey Kerr
NEW YORK, Oct 21 U.S. exports of fuel to Europe
have surged by up to 20 percent in recent weeks as refiners
take advantage of an arbitrage window created by French port
and refinery strikes, according to shipping sources.
One tanker operator said U.S. exports of diesel have jumped
to 600,000 barrels per day, up from around 500,000 bpd a few
weeks ago, supported by rising European demand as the strike at
France's main oil hub of Fos-Lavera nears its 25th day.
With the vast majority of diesel shipments headed across
the Atlantic, U.S. exports to Europe may be at their highest
levels in at least five years. (Graphic of U.S. distillate
The strikes, protesting government-mandated pension
reforms, have extended to France's refinery network and are
causing fuel shortages. [ID:nLDE69J0EF]
"Diesel exports are going great guns," the tanker operator
said, requesting anonymity.
While shipping fuel into France from tankers remains
virtually impossible since ports are blocked, the rest of
Europe is feeling the pinch of tighter supplies, he added.
French imports of oil products hit a record level this
week, a French government spokesman said on Wednesday. He gave
no details on volumes or which products were supplied.
Chevron (CVX.N) is among the companies that have booked
product tankers bound for Europe since late last week, shipping
sources said. Chevron didn't respond to a request for comment.
The oil major scheduled to load the Navig8 Stealth II
refined product tanker, rated at 50,695 deadweight tonnes, on
the U.S. Gulf Coast on Wednesday. Charter data shows it will
sail to Britain or Continental Europe, although Chevron holds
an option to divert the tanker along its journey.
Along with shipments to Europe, U.S. refiners have been
sending mostly lower quality distillates from the Gulf Coast to
fuel-hungry South America. Gasoline exports have also recently
jumped to Mexico, ship brokers said.
Depending on the U.S. port of origin, tankers can reach
Europe in as little as 11 days. The export opportunities are a
boon for U.S. refiners whose margins have been battered by weak
fuel demand, helping keep U.S. refined product stocks well
above five-year average levels.
The Asia-Europe arbitrage is closed, after being open for
the first two weeks of the strikes. However, traders said the
economics of moving U.S. distillates to Europe remain
Brokers have recorded at least five charter tankers of
distillate bound for Europe from U.S. Gulf Coast and East Coast
locations since Friday. Each ship can carry around 300,000
barrels. Several other charters may not yet be listed, they
Larger exports helped to boost product tanker rates by 10
wordscale points, or 11.8 percent, to 95 WS last week, brokers
said. Two charters were booked from the East Coast to Europe at
90 WS on Tuesday, down slightly from the earlier rates.
Several shipments are for ultra-low sulfur diesel (ULSD),
sources said. While the distillate does not meet European
specifications for road use, it can be used for home heating.
Other shipments, including the Chevron charter, are not
specified by product, the sources said.
U.S. traders said that the country's refiners would be
unlikely to send gasoline to Europe, which usually has a
surplus of the fuel. U.S. refineries would also have trouble
meeting European gasoline specs.
Still, U.S. East Coast gasoline inventories may fall as the
strikes cut European exports, which have already been falling
in recent years.
According to TOP Ships CEO Evangelos Pistiolis, shipments
of gasoline from Europe to the U.S. Atlantic Coast are down
"about 40 to 45 percent from the heyday of the pre-Lehman
Brothers-failure levels" seen in 2008, and were not likely to
regain those levels any time soon.
U.S. products such as jet fuel, whose specs are
standardized worldwide, may also be flowing to Europe, brokers
U.S. exports to Europe may compete against Asian exports,
fuel traders said. At least three tankers have been fixed this
week to ship a total 215,000 tonnes of Asian gas oil to Europe
despite a closed arbitrage window, traders told Reuters in
(Additional reporting by Ikuko Kurahone, Robert Campbell,
Bruce Nichols, Jennifer Tan and Selam Gebrekidan; Editing by