Prompt USAC ULSD barges, fuel oil cargoes dealing with supply backlog: trade
Houston (Platts)--19Nov2012/1202 pm EST/1702 GMT
Prompt US Atlantic Coast ULSD barges and fuel oil cargoes are working
through a supply backlog stemming from Hurricane Sandy, keeping the Atlantic
Coast ULSD differential at a premium to the Buckeye Pipeline and the 3%S
"up-down," which is the premium of Atlantic Coast 3%S residual fuel oil over
Gulf Coast 3%S, strong.
"Berths are tight," a ULSD trader said. "Adds a premium."
"There's good demand for barges," a second ULSD trader said.
Atlantic Coast ULSD for New York Harbor barges was heard done at the
NYMEX December heating oil futures contract plus 20 cents/gallon, up 25
points from the Platts Friday assessment, based on a deal heard done at that
level with a prompt delivery schedule.
At 10 a.m. EST (1500 GMT), the NYMEX December contract was at
$3.0561/gal, up 6.93 cents from the Friday settle.
"Prompt is very tight," said an Atlantic Coast fuel oil trader.
The tightness in prompt supply could be seen when the December 3%S
"up-down" widened gradually from 25 cents/b a couple of weeks ago to 75
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Supply had been held up due to terminal and refinery closures from
Sandy, sources said.
"Seems that existing tanks are full," a broker said, which could create
"There are not a lot of barges in the harbor," a second broker said,
regarding barge availability in New York Harbor.
With the relatively small number of barges, the backlog would take time
to work through.
The lack of available berths also exacerbated the situation, a third
ULSD trader said.
"Docks were decimated by Sandy," a third broker said. "Sunoco Newark
dock is gone."
"All FOB is tight because so many docks can't berth barges," a fourth
Combining robust demand and fewer available docks laid the groundwork
for a stubborn premium for barges against the Buckeye Pipeline.
Since November 5, the ULSD differential for NYH barges has been above
Buckeye Pipeline with an average premium of 3.625 cents/gal, reaching a peak
of 6.25 cents/gal on November 15.
Prompt supplies for high-sulfur residual fuel oil on the Atlantic Coast
have also been tight for the past couple of weeks, according to fuel oil
Fuel oil traders also said that the "up-down" will probably narrow again
closer to mid-December, but for now, while prompt supplies are tight, they
expect the December up-down to remain between 50-70 cents/b.
A large supply of the high sulfur fuel oil barrels that typically come
into the Atlantic Coast from Canada are going into the Gulf Coast region and
into the Caribbean, said a second fuel oil second trader, so this is also
causing tightness in Atlantic Coast 3%S fuel oil.
"There is one small high sulfur cargo available for the end of November,
but the earliest after that is December 6-8," said a second fuel oil trader.
Even then, the cargo available at the end of November is much higher in
sulfur, around 5%S, according to the first fuel oil trader.
--Wajih Choudhury, firstname.lastname@example.org
--Meera Patel, email@example.com
--Edited by Jason Lindquist, firstname.lastname@example.org