Can rising US gasoline consumption support Atlantic MRs


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By Jane Xie, SSY Consultancy & Research

US gasoline demand is expected to rise by 1.3M b/d y-o-y to 9.1M b/d over the summer driving season of April-September, the US Energy Information Administration (EIA) said in its June Short-Term Energy Outlook (STEO), revising its estimates upward for the second time. The improved demand projection reflects rising US economic and employment forecasts and an accelerated relaxation of containment measures as the country’s vaccinated share of the population continues to increase. A robust US driving season would benefit UKC-USAC trade.

Against the backdrop of lower domestic gasoline supplies following the Texas deep freeze in February and Colonial Pipeline’s outage in May, US Atlantic Coast gasoline imports year-to-date have grown to average 635K b/d, up from 426K b/d the same period last year and from 566K b/d in 2019, weekly EIA data showed. But a downside risk to TC2 trade is that there has been a rapid rise in gasoline stocks since the last week of May as domestic refiners ramp up throughput. US refinery runs in the week ending June 4 jumped by 330K b/d w-o-w to 15.93M b/d, the highest level since late February 2020. Coupled with lower than expected traffic mileage over the Memorial Day weekend due to rainy weather, total US gasoline stocks increased by a hefty 7M bbls w-o-w to a 241M bbls, a 14-week high. Given that US refinery runs are poised to rise further and, according to EIA, peak in July at about 16.3M b/d, this could curtail gasoline imports from Europe to the detriment of UKC-USAC trade. Still the US east coast is operating with less refining capacity than a few  June 2019

But strong US refinery runs could in turn benefit US Gulf MRs, as the surplus of oil products supply is set to widen, particularly for diesel for which domestic stocks have been at lower levels. Rising output and inventories of US oil products would provide increased opportunities to lift exports such as to Mexico and Brazil, where import demand could rise on the back of oil demand recovery prospects and refinery maintenance. The 115K b/d Abreu e Lima refinery in Brazil is expected to undergo a lengthy 90-day maintenance this month, newswires reported. US distillates exports in the week to June 4 edged up to 1.06M b/d, up 85K b/d w-o-w, while domestic distillates stocks also increased 4.4M bbls w-o-w to 137.2M bbls, the highest since late April.

 

US Gasoline Stocks

 

 

Source: US EIA, SSY

 

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