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Rare LR2 of Saudi ULSD heads to New York on high USAC price

London (Platts)--30 Nov 2017 1151 am EST/1651 GMT


A long-range 2 tanker of ultra low sulfur diesel from Yanbu, Saudi Arabia, is heading to New York in a route that has not been taken in a couple of years, as high US Atlantic Coast prices alter typical diesel trade flows. The 112,691-dwt Seaways Sheanandoah is now bound for New York harbor, according to data from cFlow, S&P Global Platts trade flow software, after originally being fixed for Northwest Europe, according to shipping sources.

A prompt HOGO, the difference between NYMEX ULSD futures and ICE low sulfur gasoil futures, that has recently been coming off its highest since Janaury 2016 has caused diesel to be exported to Latin America from Europe, although some sources also said they believed that the USAC was a potential short from Europe.

However, it is unusual for a Saudi cargo to head to the US, with Europe ordinarily the principal extra-regional exporter when arbitrages open.

Should the cargo end up discharging in New York it would be the first Saudi-origin diesel cargo to arrive since February 2015, according to data from the Energy Information Administration.

Ordinarily, cargoes from Saudi Arabia, typically in sizes of around 100,000 mt head to the Amsterdam-Rotterdam-Antwerp hub to be sold into the barge or coaster market or larger ports in the Mediterranean such as Lavera.

The cold properties required to meet US specification material has usually been an impediment to material from Yanbu heading to the Atlantic Coast despite the larger cargoes sizes usually providing greater economy of scale than Europe.

However, some material this year has been heard to meet the German winter grade, the minimum requirements of which are close to that shipped via the Colonial pipeline on such key parameters as cloud point.

--George Shaw, george.shaw@spglobal.com

--Edited by Jonathan Dart, jonathan.dart@spglobal.com




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