U.S. Gas Imports Expected to Decline 5% in September

Gasoline shipments from Europe to the U.S. could drop as much as 5% over the next couple weeks as the nation’s peak consumption period comes to a close.

Nineteen tankers have been booked or are due to be chartered for loading in the next two weeks, one less than just a week ago. “There’s a significant drop in shipments compared to the summer driving season,” said Ehsan Ul-Haq, senior market consultant at KBC Energy Economics in Walton-on-Thames, England. “There’s enough gasoline in the U.S. and refinery margins in the U.S., particularly in the Midwest, are high.”

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Gasoline consumption tends to decline in the fall as the summer driving season, between Memorial Day weekend and Labor Day, comes to an end. Furthermore, U.S. producers prefer West Texas Intermediate crude because it tends to be cheaper than Europe’s Brent crude, which is used to settle about half of the world’s physical oil prices, and are able to rely more heavily on it for their lower demand during non-peak seasons. WTI is currently trading at $24.96 less a barrel than Brent crude.

U.S. gasoline stocks rose 1.9 million barrels to 210.8 million barrels last week, just as demand began to decline, falling 1.2% to 8.85 million barrels a day. With that, the U.S. will need less European oil. Of the 19 vessels, 10 have been booked while the other nine will probably be hired soon. Between them, they will be able to carry 6 million barrels of gasoline, a rate of 427,000 barrels-a-day, which is only 50% of the 849,000 barrels the U.S. imported on average over the past year.

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Tankers coming from northwestern Europe to the U.S. East Coast were earning a daily rental income of $2,387 as of yesterday, 15% more than their 2011 low, reached just last week on September 8. Each tanker would normally carry about 37,000 tons of cargo, or 315,000 barrels. But charter rates on the route were down 4.9% yesterday from the year’s first session on January 4, to 126.04 Worldscale points, which are a percentage of a flat rate for more than 320,000 specific routes that is revised every year by the Worldscale Association in London to reflect changes in fuel costs, port tariffs, and exchange rates.