VGO imports bulk up US Gulf coast supplies

High-sulphur vacuum gasoil (VGO) imports from Saudi Arabia are adding to an existing surplus at the US Gulf coast, where multiple fluid catalytic cracker (FCC) issues curbed demand for the feedstock.

The most recent tender from Saudi Arabia offered approximately 500,000 bl of 2pc sulphur VGO scheduled to load 8 May. This tender closed on 13 April, but results have yet to be confirmed.

At least two other Saudi Arabian VGO cargoes have been exported to the US in the past two months. The Oracle loaded from Yanbu, Saudi Arabia, on 16 February and discharged 600,000 bl of VGO in New Orleans, Louisiana, on 8 April. The Energy Champion loaded 8 March from Jeddah, Saudi Arabia, and arrived 14 April in Houston. This ship likely carried a combination of high sulphur fuel oil (HSFO) and VGO.

Saudi Aramco-owned Motiva was heard to be selling part of the latter VGO cargo to another refiner in Port Arthur, Texas. Motiva's 600,000 b/d refinery is also located there.

The US VGO market is already oversupplied with the return of higher crude throughputs amid secondary-unit outages. At least three major refiners, two of which are typically buyers, offered to sell prompt VGO barges this week in the Houston area as well as on the Mississippi River.

High-sulphur VGO differentials to Brent crude fell this week to the lowest level since 15 December, with the assessment averaging at June Brent +$3.82/bl on 14 April.

By Daphne Tan