Distillates flows to Northwest Europe and the Mediterranean from the US
Gulf Coast for November arrival saw a sharp increase over the last seven days,
with around 500,000 mt leaving the region, the majority 10 ppm ultra low
sulfur diesel, according to data from S&P Global Platts trade flow software
cFlow.

The high volume is due to a more workable arbitrage on Long Range
tankers, which can carry around 60,000 mt cargoes. Three such vessels were
observed to leave the US’s refining and storage hub, out of a total of 11
departures from the region.

The total volume now expected to arrive in November is around 700,000 mt,
the highest since August, after the USGC was plagued by disruptions in
September due to hurricanes.

The majority of the current volume sailing trans-Atlantic is heading to
Northwest Europe where the product is likely to go into CIF shorts, according
to one source, rather than break-bulked into the Amsterdam-Rotterdam-Antwerp
barge market.

“Have seen a bit more [US volume], not so much being shown on the market
though, looks like they more or less all have a home and mainly into the CIF
shorts so far,” the source said.

One potential reason behind the pickup in volume is, somewhat
paradoxically, an outflow of material from ARA to Latin America, with
around five to six vessels fixed to Latin America from NWE, that have
displaced some of the ordinarily steady flow from the USGC.

However, this arbitrage is not expected to continue for long, as it is
dependent on seasonal specification changes in Europe leading to some summer
spec product being offered at discounts ex-refinery.

–George Shaw, george.shaw@spglobal.com

–Rebecca Grenham, rebecca.grenham@spglobal.com

–Edited by Alisdair Bowles, alisdair.bowles@spglobal.com

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