US East Coast Supplies Scramble For Distillate Supplies Ahead of Turnarounds

US East Coast fuel suppliers are scrambling for distillate supplies ahead of planned maintenance at two key refineries, which will further tighten supplies and boost prices in the region that has already low inventories ahead of the winter, traders and analysts said.

• Prices of diesel and heating oil, known as distillates, have jumped along with benchmark US diesel futures' 7.6% increase since last month.
• "A lot of distillate fuel is going to need to make its way to the US East Coast in short order, and it's surprising it hasn't come already," said Kpler analyst Matt Smith.
• In the coming weeks, the US East Coast will lose about 120kbpd of distillate fuels normally produced by the Irving Oil's refinery in St. John, Canada, and Delta Airline's DAL.N Trainer, Pennsylvania, refinery according to Reuters calculations. Both will be offline beginning in mid-September for about six to eight weeks.
• The US normally receives diesel cargoes from other countries such as India and Qatar during high demand autumn months to stockpile for winter, which is why it is so unusual for so few imports to be arriving days before major refiners are set to be turning off distillate producing units, Smith added.
• The northeast will need to secure even more supplies from elsewhere, Kpler's Smith said.
• Low feedstock supply and refinery outages have hit distillate stocks across the US East Coast distillate stocks stood at 28.9mn barrels as of Sept. 1, less than 8mn barrels above the record low hit last year, according to the EIA. Northeast distillate inventories were 33% below their five-year seasonal average as of 25 August.
• Reflecting that tightness, spot market spreads between distillate and crude oil in New York Harbor are likely to surpass their record highs set in 2022, which topped $120/bbl according to energy economist Philip Verleger.
• ULSD OCT 23 down -0.5% at 3.35$/gal
• US ULSD crack down -1.2$/bbl at 52.56$/bbl
• See latest refinery maintenance update: https://marketnews.com/us-refinery-maintenance-update