US Gulf floating fuel storage up amid Colonial outage

At least four tankers have been booked to store refined products in the US Gulf coast as refiners in the region seek outlets for production typically transported through the cyber attack-crippled Colonial Pipeline system.

Marathon put the Ayse C Suezmax on subjects for a 15-30 day floating storage contract for $25,000/d, according to shipbrokers, while Valero put the Khawr Aladid long range (LR) 2 tanker on subjects for 20-40 day floating storage for $25,000/d. PBF Energy put the Crimson Pearl medium range (MR) tanker on subjects for a 15-30 day floating storage for $30,000/d, and Phillips 66 fixed the Energy Centurion LR 1 tanker for a 30-60 day floating storage for $30,000/d.

The heightened chartering activity, combined with a surge in oil product export volumes from the US Gulf coast, has helped lift US Gulf coast MR tanker rates to the highest levels since last May — when rates climbed to the highest levels ever assessed by Argus because of a surge in global floating storage demand following the April 2020 oil price crash.

Phillips 66 booked the Elaia MR tanker for a voyage from the US Gulf coast with 13 May loading with discharge options in the Europe and Brazil at WS150 and WS220, respectively. Both rates are up by more than 70pc from where Argus assessed them on 7 May.

Increased demand for Europe-US Atlantic coast oil product shipments to replace volumes typically supplied by the pipeline has also provided upward pressure to MR rates in the Atlantic basin.

"Given the shortage of domestic supply related to the pipeline shutdown, we believe [US] imports will likely increase in the coming weeks as traders respond to pricing arbitrage," investment bank Jefferies said.

By Michael Connolly