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US diesel exports to ARA set to rise on limited European supply, firm US production

Diesel deliveries from the U.S. Gulf Coast to Europe's primary trading and refining hub, the AmsterdamRotterdamAntwerp (ARA) area, are set to increase owing to enhancing export margins on the back of scarce supply in Europe and increasing U.S. refinery production, according to traders and ship tracking data.

Europe is looking for greater transatlantic diesel imports, as weaker export margins for deliveries from east of Suez slowed circulations on that path in the last 2 months. Rising European gasoil demand likewise triggered greater transatlantic imports.

Separately held gasoil stocks in ARA fell for the 3rd successive week on Thursday to 2.13 million tons, according to consultancy Insights Global.

U.S. diesel exports to ARA might reach all-time high levels above 250,000 barrels per day (bpd) in December, compared with a. regular monthly average of 28,000 bpd over January-October, according to. ship tracking information from Kpler based upon tankers signalling ARA as. the location. Kpler data dates back to January 2017.

Overall U.S. extract fuel exports, including diesel and. gasoil, reached 1.55 million bpd in the week to Nov. 29, the. highest seasonal level because Nov. 2018, the Energy Information. Administration stated.

Strong U.S. refinery production, enhanced arbitrage. economics, and supply tightness in the European market stimulated. the uptick in transatlantic diesel deliveries, Sparta. Commodities analyst James Noel-Beswick stated.

Europe is a net importer of diesel, the main transport. and industrial fuel for the continent. Europe diversified its. diesel import sources because the EU embargo against Russian oil. following Moscow's intrusion of Ukraine. Russia was Europe's. most significant diesel provider before the war.

Europe's diesel imports from east of Suez sources fell in. current months. In October and November, east of Suez diesel. exports to ARA was up to an average near 100,000 bpd, cutting in half from. 224,000 bpd averaged in January-September, according to Kpler.

Still, higher U.S. refinery production could sustain diesel. exports to northwest Europe, as U.S. diesel demand remains weak. U.S. refinery utilisation rate rose to 93.3% in the week to Nov. 29, compared to the 5-year average for November at 87%,. according to EIA information.

The U.S. Gulf Coast will continue to require to clear excess. diesel and much of this will still end up in Europe, Ronan. Hodgson, middle extracts analyst at FGE stated.

(source: Reuters)