Asia draws US Gulf, west coast gasoline

Asia is drawing gasoline cargoes from the US Gulf and west coasts, as the region looks beyond suppliers in Europe to cover a shortage of high-octane fuel.

An 80,000t cargo on the long range (LR2)-sized Maersk Phoenix has been booked to load 20 December from the US Gulf coast to Singapore, according to fixture reports and shipping sources. On the west coast, the Atlantic Blue will carry gasoline from the Bay Area to Asia, loading next week. A second west coast cargo could be loading gasoline to China, loading mid-December.

It is rare for an LR2 size cargo to load in the US Gulf, although larger tankers are more economical for a longer trip. It is also less common for west coast gasoline to move to Asia compared with typical outlets in Latin America.

US gasoline stocks rose to 2.26mn bl during the week ended 25 November, the highest level in more than a month and well-above five-year averages, according to data from the Energy Information Administration. The biggest build was in the Gulf coast, where stocks gained by 1.6mn bl to 82.3mn bl.

In addition to growing stocks, higher costs for domestic environmental compliance also added to incentives for US producers to export. Argus Renewable Volume Obligation (RVO), which measures the environmental compliance cost of producing gasoline and diesel for domestic consumption, rose to 10.85¢/USG yesterday, the highest level since 2013.

Some market participants anticipate wider gasoline arbitrages to Asia next year. While Latin American demand will remain strong and stable, further destinations in Asia and West Africa could become profitable, some said. A domestic specification change in the US will see the sulphur content dropping from 30ppm to 10ppm starting in January, which could mean stronger prices in the US. But higher standards of renewable fuel blending in 2017 will see the cost of compliance go up as well, which should encourage exports.

Indonesia, Asia's largest gasoline buyer, saw its imports of gasoline with a research octane number (RON) between 90 and 97 reach 3.2mn bl in September, 70pc higher from August and nearly doubling year-ago levels, according to government data. Australia, Pakistan, Sri Lanka, Malaysia, Myanmar and the Philippines have experienced fuel shortages as well.