New demand has been created on routes from the US Gulf to Central America, South America and West Africa, the broker reports in a recent market report. But there is a downside.
“Although the US oil surge is having a positive effect on US product tanker movement, it is hurting the already weak European refining and product tanker markets, and could prove to have longer-term negative effects on European refiners if current conditions persist,” Poten states.
The report goes further. Rising oil production at home resulting from new drilling technology means the US is less reliant on foreign imports which, in contrast to products movements, are falling. A significant export trade in products has now been established from the US Gulf to West Africa, from where the US has traditionally taken large volumes of crude oil. Historically dominant European refined product exports are feeling the pinch as a result.
“European refineries, with margins of $6.18 a barrel, are struggling to compete against American refineries,” Poten says, quoting Reuters as a source. US refiners are making $21.18 a barrel, according to the news agency. Although African refinery capacity will increase over the next five years, rising energy demand will see import demand continue to increase and the new trade in refined products from the US could become a permanent feature of the market.
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