The recent announcement by Canadian…
Oil prices fell this week…
Commodity trading behemoth Trafigura is shipping a load of 375,000 barrels of gasoline to the U.S. East Coast, where a jump in fuel prices has apparently created the perfect environment for the Asian nation to try and ease its own fuel glut.
The price jump was a consequence of a pipeline leak that led to the shutdown of the main artery—Line 1—between the Gulf Coast refineries and the East Coast. Line 1 transports 1.5 million barrels of gasoline daily, catering to the fuel needs of some 50 million people.
China, for its part, has been oversupplied with fuels, gasoline included, thanks to the expanding operations of the so-called teapots—small, independent refineries that just last year got the green light from Beijing to claim crude oil import quotas. This boosted their output significantly, and China is now swimming in gasoline.
The 375,000-barrel cargo, Bloomberg notes, is the first Chinese shipment of gasoline to the East Coast in nine years. It’s not, however, the first to the States for that period: two weeks ago Trafigura delivered 300,000 barrels of Chinese gasoline to Houston.
A Morgan Stanley commodity strategist, Adam Longson, told Bloomberg that more Chinese fuel imports are to be expected in the next few weeks, thanks to the Line 1 shutdown, even though the pipeline operator, Colonial, built a bypass at the damaged section and restored the flow of fuel to the East Coast.
China exported an average 184,353 bpd in August, down 30 percent on July and 41 percent on June, when exports hit a record-high of 306,000 bpd. However, the decline in July and August was a result of stronger domestic demand, seasonal maintenance, and lower crack spreads for gasoline, which discouraged refiners to increase output. Yet, the spreads started improving in September, suggesting export rates would improve as well.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.