Fuel oil exports bound for the U.S. Gulf Coast slumped to their lowest level because January 2019 last month, an indication of weakened refinery need as margins have softened, experts said.

Feedstocks like high sulfur fuel oil and other heavy residues can be refined into greater value products such as gasoline and diesel utilizing secondary units.

But loadings of those items to the Gulf Coast, America's. biggest refining hub, fell by a 3rd in August from the previous. month to 260,000 barrels per day (bpd), according to information from. ship tracker Kpler, marking a more than five-year low.

Cargoes departing Mexico for the Gulf Coast fell 25%. month-over-month, striking 77,000 bpd and their most affordable level. considering that July 2021, driving much of the decline, Kpler data revealed.

On the need side, refinery margins aren't strong. enough to incentivize U.S. Gulf Coast refiners to run their. secondary units harder to process this fuel oil, stated Rohit. Rathhod, a market analyst at energy scientist Vortexa.

U.S. fuel splitting margins - the spread in between gasoline. futures and West Texas Intermediate crude futures << RBc1-CLc1 >-. usually narrows as the summertime driving season draws to a close. Even so, that spread is presently at around $12 a barrel,. approximately $10 a barrel below in 2015's levels.

We are seeing a minimum of double digit portion point. reductions in secondary unit utilization, particularly on the. East and Gulf Coast since of shrinking margins, stated Rommel. Oates, creator of refinery operations intelligence company,. Refinery Calculator.

Refinery Calculator expects this pattern to spread out more. broadly throughout other U.S. refineries over the next few months,. weighing on August fuel oil loadings.

Gulf and East Coast integrated operating refining capability. accounted for just under 60% of total U.S. capability since June. 2024, according to an analysis of the most current information from the. Energy Information Administration.

ATTACKS HINDER STREAMS

Fuel oil shipments from east of Suez to the U.S. Gulf Coast. also fell last month as continuous attacks on vessels crossing the. Red Sea continued to push shippers to divert around the horn of. Africa, avoiding the faster Suez Canal path, according to. Vortexa experts.

Yemen's Iran-aligned Houthi militia has actually been interfering with. global shipping to show its assistance for Palestinians in the. Gaza dispute, targeting vessels in the Red Sea.

Two vessels bring fuel oil, the AFRODITI and SEAMAJESTY,. departed Iraq around two months ago for Louisiana and sailed. around the Cape of Great Wish to avoid the Red Sea, contributing. to a drop in U.S. Gulf Coast imports in August, said Vortexa's. Rathod.

Red Sea attacks and the summer season demand in the Middle East. where they burn fuel oil for power generation definitely appear to. have taken a toll on fuel oil imports into the U.S., Rathod. added.

Saudi imports of fuel oil leapt to 385,000 bpd in August,. Kpler data reveal, increasing by a quarter on the month and by simply. over 40% on the year.

(source: Reuters)