A Valero-controlled tanker, reportedly laden with diesel from the U.S.Gulf, has diverted from its intended destination of Europe and is now at the storage port of St. Lucia, amid falling prices and demand for the distillate on the continent. The vessel loaded 38,000 metric tons of refined product, assumed to be ultra-low sulfur diesel, at the Valero Energy refinery at Meraux, U.S. Gulf, on July 31, according to information compiled from shipbrokers and satellite vessel-tracking data.
The vessel sailed through the strait of Florida and on Aug. 4 siganled it was arriving at Pembroke, U.K., in 12 days, where Valero owns the Milford Haven, Wales, refinery.
A day later, the tanker headed south, and by Aug. 9 had arrived at St.Lucia in the Caribbean, where Buckeye owns a crude and refined product storage terminal.
The vessel had been originally chartered with options to either ship to Europe or go to the Caribbean, suggesting that the decision was made at the last minute to head south instead of crossing the Atlantic as prices for ULSD in Europe tumbled to the lowest levels of 2015 last Thursday.
ULSD assessments in northwest Europe are reflecting concerns that the oversupply of jet fuel that's dragged down prices there to six-year lows is now extending further in the middle distillates sector to ULSD.
The outright diesel cargo price today was assessed at $472 per ton, the second-lowest level for 2015. The price has slumped 18% since the beginning of July, while jet fuel is as much as 21% lower.
Shipments of diesel to Europe from the U.S. -- the second-biggest supplier -- are seen slowing, and estimated to be at levels under 500,000 metric tons in August, based on OPIS Tanker Tracker data. Tankers are seen being delayed or taking up options to ship refined product elsewhere.
Shipments have averaged 838,000 tons in the first four months this year, the most recent Europe Commission trade data available show.