EIA: Distillate stocks tying up tankers

EIA says floating storage and long transits for tankers stemming from Europe’s high distillate stocks

Europe’s high distillate inventories are forcing traders to get creative in shipping, according to an analysis from the Energy Information Administration (EIA).

Inventories of heating oil and diesel in the Amsterdam-Rotterdam-Antwerp (ARA) region are above 26 million barrels, which is seven million barrels higher than the five-year average, the EIA says.

The high distillate inventories stem from a warmer-than-usual winter in Europe, strong domestic refinery production, and high levels of imports from the Middle East and India. As a result, the EIA says distillates “are being held in floating storage and imported cargos are being diverted to longer voyages.”

The EIA said vessels off the coast of Gibraltar in southern Spain and outside of the ARA ports have been booked specifically for distillate floating storage.

Likewise, traders are opting to ship distillates along longer routes when shipping to Europe. The EIA says cargoes from the Middle East and India are choosing 30 to 40 day transits around the southern cape of Africa instead of the 15 to 20 day transit through the Suez Canal. Traders are also looking to store at intermediate locations prior to the final transit to Europe.