The recent Memorial Day weekend could be poised to bring late spring tidings to product tanker owners trading in the Atlantic Basin. A simple year‐on‐year comparison reveals that the US could be caught shorter‐than‐usual this season as far as gasoline is concerned, say Poten & Partners in a recent market analysis, extracted as follows:
A peek into gasoline inventories indicates that they appear to be trending lower in the face of rising seasonal demand. The US Department of Energy’s Energy Information Agency, or EIA, reports that weekly demand for gasoline is in the range of 9.1 million barrels per day for the total US.
While there is a fair bit of noise in the weekly reporting numbers, this total demand marks an increase of around 450,000 barrels per day of demand on a four‐week moving average basis.
Conversely, inventories are reportedly lower than last year. While the opportunities for rising imports present strong demand fundamentals for product tankers, tonnage oversupply could certainly preclude a positive response in spot market rates.
So far, gasoline demand is already trending higher than last year, as seen [see accompanying graph]. A draw‐down of gasoline stocks could be experienced in the coming few weeks. Import volumes appear to be generally in line with last year in the range of 800,000 barrels per day – the highest levels seen thus far year‐to‐date
Since demand for gasoline in the US is highly seasonal, total stock levels are about 3% lower than a year ago, reducing the total days of cover (the ratio of stocks to demand), by a couple of days. This could result in slight increases on gasoline prices in the near term and could potentially pull forth incremental imports from European exporters.
Although the recipe is ripe for improving ship demand, a long and growing tonnage availability list will probably keep a lid on the potential of any runaway rates.
Source: Poten & Partners