Bookings for MR Tankers On the Rise as Gasoline Inventories Dwindle

medium range tanker transpetrol
Medium Range tanker, image courtesy Transpetrol

(Bloomberg) — Gasoline shipments across the Atlantic Ocean from Europe may increase after inventories of the auto fuel on the U.S. East Coast reached this year’s low.

Traders and oil companies booked 14 tankers to make the voyage for the two weeks to Aug. 1 and 13 more are likely to be hired, according to the median estimate in a survey yesterday of six shipbrokers, traders and owners who specialize in shipping gasoline. Demand for the fuel may be poised to strengthen, according to BNP Paribas SA.

East Coast gasoline inventories slid to 52.2 million barrels as of July 13, according to Department of Energy data. That’s the smallest stockpile since November and the lowest level for July for figures going back to the start of 1990. The pump price of regular gasoline reached this year’s low of $3.326 a gallon on July 1, according to figures from the American Automobile Association.

“U.S. gasoline inventories are far too low, which is worrisome in a period of peak demand,” said Harry Tchilinguirian, head of commodity-market strategy at BNP in London. “We still think there is upside to gasoline demand in August and September.”

Tanker bookings and potential charters for the coming two weeks would be the most since the two weeks from April 26, prior surveys showed. U.S. gasoline demand tends to peak during the so-called driving season from the end of May to early September.

Tanker Rates

“U.S. gasoline has to price higher to attract more imports from Europe, so in a month or two, that’s a proposition that would stabilize rates for refined oil products across the Atlantic,” said Tchilinguirian.

Tankers hauling 37,000 metric-ton cargoes of gasoline across the Atlantic are losing $17 daily, according to the London-based Baltic Exchange. They were earning $1,672 a day at the start of this month and $20,899 on Jan. 3, the exchange’s data showed. The cargo size equates to 315,000 barrels.

Fifty vessels may be available to carry the fuel across the Atlantic up to Aug. 1, five fewer than last week, according to the survey. As many as 63 tankers, the most in at least a year, were registered for the two weeks from July 5.

The 27 ships booked or likely to be chartered for the journey, known as Medium-Range tankers, would be able to haul about 8.49 million barrels of gasoline, or 607,000 barrels a day, over the next two weeks. That’s 88 percent of the 686,000 barrels the U.S. imported daily over the past year, according to the Department of Energy.

The survey is based on so-called single-voyage, or spot, charters and excludes loadings under longer-term contracts. It assumes shipments to the U.S. East Coast from northwestern Europe.

Following is a table of ships chartered and likely to be hired for the trans-Atlantic voyage loading over the two-week periods from the dates shown. The table also displays the number of ships available to be booked.

Ships Hired Ships Likely to be Hired Available Ships Total
11-Jul 12 10 55 22
18-Jul 14 13 50 27
Change 17% 30% -9% 23%
– Rob Sheridan, Copyright 2012 Bloomberg