US fuel oil exports have surged by 45% this month as demand grows in Asia and the Middle East, while domestic fuel oil supply has fallen to its lowest level since April 2023, according to data from the Energy Information Administration (EIA).
Changes in monthly US residual fuel oil from August to September (so far):
• Supply down 77,000 b/d to 183,000 b/d
• Production down 17,000 b/d to 286,000 b/d
• Imports up 11,000 b/d to 97,000 b/d
Much less fuel oil has been supplied out of storage to outlets like bunker fuel blenders and bulk terminals, to refinery coking units for upgrades to other higher-value products, or power generation. Supply, or implied demand, has come down from 260,000 b/d across August to 183,000 b/d so far this month.
As a result, fuel oil production in the US has also dropped by 17,000 b/d to 286,000 b/d this month.
Total US fuel oil stocks have dropped by 206,000 bbls from August to 26.10 million bbls so far in September, mainly due to higher fuel oil exports from the US.
The country’s fuel oil exports have also increased from 151,000 b/d in August to 219,000 b/d in September, Vortexa data shows. 27% of these exports have departed for Singapore.
Fuel oil exports from the US are increasing, especially from the West Coast ports, as demand in Asia and the Middle East picks up. VLSFO is being shipped to Asia, where supply issues and high demand from China are driving the market. China is facing export limits, which is pushing countries like Singapore to buy more VLSFO, independent energy and shipping analyst Matias Togni said.
In the US, gasoline and diesel prices have dropped after the summer driving season, leading to lower margins for refineries that process fuel oil into gasoline and diesel. As a result, some refineries are operating at lower capacities, freeing up more fuel oil for export.
Meanwhile, demand for high-sulfur fuel oil (HSFO) is stronger than expected, especially in the Middle East, where power plants are using it to cope with high temperatures. This has led to rare shipments of HSFO from the US to countries east of the Suez Canal, Togni added.
Changes in monthly average US residual fuel oil from August to September (so far):
- Total US stocks down 206,000 bbls to 26.10 million bbls
• Gulf Coast stocks down 159,000 bbls to 15.99 million bbls
• East Coast stocks down 205,000 bbls to 4.61 million bbls
• West Coast stocks up 81,000 bbls to 4.31 million bbls
US fuel oil imports have risen by 12%, from 86,000 b/d imported in August to 97,000 b/d so far this month.
Mexico has remained the US’ biggest fuel oil import source, accounting for 37% of total imports so far in September, according to data from cargo tracker Vortexa. The Bahamas and Iraq have been the second and third-largest import sources.
Source: ENGINE
