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By Laura Blewitt and Sherry Su (Bloomberg) — There are few better examples of how weird and wonderful oil shipping and trading can be: diesel that left China almost three months ago is going to reach New York any moment now.
The Flagship Tulip will reach America’s key East Coast port later on Thursday, according to a signal from the vessel earlier. In mid-November, the carrier collected diesel from a much bigger supertanker off the coast of Togo in West Africa. That ship, the Coshonour Lake, originally loaded diesel in China and Taiwan with an initial plan to deliver it to Europe, according to a person familiar with the matter.
Even by the standards of long-distance trading, where oil-price gaps routinely result in cargoes being sent thousands of miles, this particular consignment has traveled far: about 17,000 in nautical mile terms, or 19,000 to landlubbers. The circumference of the Earth is 24,873.6 miles, according to NASA.
When the cargo left China, it was on a tanker that would normally only transport crude. However, because the ship was new — meaning its internal tanks hadn’t been sullied — it was able to transport diesel, known among shipping types as a clean cargo.
The precise reasons for the shipment will probably only ever be known to a few traders.
Perhaps Hurricane Harvey — which shut down about a fifth of U.S. refining at one stage in early September — temporarily lifted New York diesel prices to such a high level that briefly made a delivery profitable. Or maybe it was more mundane: once the first supertanker had gone almost 11,000 nautical miles to West Africa, it just made sense for the second vessel to take part of its cargo across the Atlantic. After all, it was only another 5,700 miles.
© 2017 Bloomberg L.P
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