US diesel exports to Europe dip on plummeting refining output
By Shariq Khan and Laura Sanicola
NEW YORK/WASHINGTON (Reuters) — A slump in U.S. refining activity and disruptions to global trade have tightened diesel supplies in recent weeks, dampening historically high U.S. diesel exports to Europe this month.
Difficulties in securing U.S. diesel complicate an existing supply crunch in Europe, which previously relied on Russian fuel exports. U.S. diesel cracks briefly surged to a four month high of over $48 a barrel this month, crimping arbitrage opportunities to ship the fuel to Europe.
Many of Europe's other suppliers in the Middle East and Asia have been forced to traverse around the Cape of Good Hope due to Houthi attacks on vessels in the Red Sea, adding lengthy delays and making that trade less profitable too.
European imports of U.S. diesel fell by almost half this month to 6.65 million barrels, down from 11.44 million barrels in January, which marked the highest level since August 2017, according to analysis by ship tracking firm Kpler.
«European diesel appears to be the key at-risk product due to rerouting, supply availability, and distorted arbs,» Macquarie analysts said in a note this month.
The decline in trade came as the 435,000 barrel-per-day BP (NYSE:BP) Whiting refinery in Indiana — a major U.S. diesel producer — was forced shut in early February following power outages.
That outage coincided with operational issues at several plants from a mid-January cold snap, like TotalEnergies (EPA:TTEF)' 238,000 bpd Port Arthur, Texas, refinery. Others, including Motiva Enterprises' 626,000 bpd plant in Port Arthur, are undergoing planned turnarounds.
U.S. refinery utilization rates have fallen from near 93% at the start of the year to 80.6% this month, the lowest rate since
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