Fuel barge movement from north to south US picks up

Rare barge gasoline shipments have increased from New York Harbor to southeastern ports this week after regional supplies tightened following the Colonial pipeline outage.

At least three barges carrying CBOB have been booked from New York Harbor to the Carolinas and Georgia this week, according to traders. This is in addition to at least one barge booked for Baltimore, Maryland, over the weekend. Transit time on these routes is typically three to four days.

North-south barge movements are uncommon, as the Colonial pipeline typically provided more than enough supplies to southeastern states — so much that the pipeline's gasoline segment ending in Greensboro, North Carolina, has been operating under capacity since September 2020. But the Colonial pipeline outage has caused a shortage of fuel across the east coast as well as available barges.

The barge trades done this week were priced at least as high as 4.5¢/USG above the Nymex RBOB contract on a delivered basis. The cost for barging from New York Harbor to these southern destinations was estimated at as high as 7.5¢/USG, or the equivalent of 3¢/USG under the Nymex contract on an FOB basis in New York Harbor. In comparison, prompt Buckeye CBOB traded at 5¢/USG to 6.5¢/USG under the Nymex contract yesterday.

The US government issued a single waiver to the Jones Act to an individual company yesterday, which allows foreign-flagged vessels to transport fuels between US ports. All available Jones Act-compliant vessels had been booked up earlier this week. More waivers are likely on the way.

Colonial began a phased restart of the pipeline yesterday afternoon after stopping operations on its 5,500-mile pipeline network on 7 May following a ransomware attack. Shipments of existing inventory restarted on 10 May under manual control on Line 4, running from Greensboro, North Carolina, to Woodbine, Maryland, but existing gasoline stocks were thin.

Prior to the pipeline outage, New York Harbor gasoline inventories fell to a six-week low at 35.4mn bl in the first week of May following a decline in imports and were well below last year's level of 38.7mn bl, according to data from the Energy Information Administration.

Lower Atlantic coast gasoline stocks rose slightly the first week of May to 24.6mn bl but were well below 2019 and 2020 levels.

By Stephanie Crawford