Traders booked the most tankers in eight months to ship diesel and heating oil to Europe from the U.S. Gulf, where refining is surging as a consequence of America’s rising crude production.
Oil companies either booked or plan to charter 16 tankers to transport cargoes on the route for loading during the next two weeks, according to the survey of six people involved in the trade yesterday. That compares with nine last week and is the highest count since Nov. 6.
The highest U.S. oil production in more than two decades means Gulf Coast refineries are processing close to the most fuel ever. A ban on exporting most crude means the nation’s plants can tap cheaper supplies than their European counterparts. Tankers taking those refined fuels across the Atlantic Ocean are earning the most for the time of year since at least 2012.
“There has been a strong increase of product being shipped from the Gulf Coast to Europe,” George Los, senior market analyst Charles R. Weber Co., a shipbroker in Greenwich, Connecticut, said by e-mail yesterday. “The month is on course to conclude at a record high.”
West Texas Intermediate crude (NYMEX:CLQ14), the U.S. grade for which futures are traded in New York, costs about $5 a barrel less than Brent, the benchmark for plants in Europe, according to data on the ICE Futures Europe exchange.
Refineries in the Gulf of Mexico processed 8.62 million barrels a day of crude in the week to July 18, the highest for the time of year in Energy Department data starting in 1992. The all-time high was 8.65 million barrels a day on July 4. Total U.S. refining rates of 16.81 million barrels a day are also close to a record.
Tankers on the trade route to Amsterdam from Houston earned $12,106 a day yesterday, according to data from the Baltic Exchange, a publisher of freight prices based in London. That’s the highest for the time of year since at least 2012.
Derivatives to hedge July-to-September freight costs on the route traded at about $26 a metric ton yesterday, compared with as less than $20 a ton at the start of June, according to the exchange’s data.
The 16 ships are known as Medium Range tankers, for which standard cargo sizes are 38,000 metric tons. That implies exports of about 325,000 barrels a day. Nine of the charters have already been arranged and seven are anticipated cargoes.
While shipments to Europe from the U.S. are accelerating, those in the opposite direction are in decline. Traders hired or plan to hire 17 ships for the trade route, four fewer than the same week in 2013 and the least for the time of year since 2012, Bloomberg surveys show.