U.S. Gulf Coast fuel oil imports hit record low as Latin America deliveries slow
Fuel oil deliveries into America's largest refining hub on the U.S. Gulf Coast fell to a record low in December, according to data from ship tracker Kpler, as Latin American supplies dried up.
The drop in fuel oil imports comes as residual fuel oil stocks on the U.S. Gulf Coast averaged just 14.2 MMbbl last month, their lowest December average since 2002, according to an analysis of data from the Energy Information Administration (EIA).
Feedstocks like high-sulfur fuel oil and other heavy residues can be refined into higher value products such as gasoline and diesel using secondary crude units.
The four-week average refinery utilization rate on the U.S. Gulf Coast was at 94.9% in the week to Dec. 27, according to the EIA, up from 92.5% on the year.
However, fuel oil flows from key-supplier Mexico fell in December to 92,000 bpd, marking a second straight month of decline. The new Olmeca refinery, owned by Mexican state energy company Pemex, was only working at nearly 17% of its 340,000-bpd capacity in November.
"(The drop in fuel oil imports) looks supply-driven given that refinery utilization was strong on the U.S. Gulf last month," said Matt Smith, an analyst at Kpler. "Deliveries from Latin America dropped to their lowest in three-and-a-half years, driven by Mexico, which has been dealing with a number of refinery issues."
By the numbers. Fuel oil imports discharging along the U.S. Gulf Coast slipped to 222,000 bpd last month, a near-third decline on the month and marking the smallest volumes delivered since at least January 2017, when Kpler began collating the data.
Deliveries from Latin American countries slipped to 115,000 bpd in December, down from 135,000 bpd in November and their lowest level since June 2021.
Colombian fuel oil headed to the Caribbean and the Netherlands instead of the U.S. Gulf Coast, Kpler's Smith pointed out, while barrels from Middle Eastern suppliers such as Iraq and Kuwait were pulled east of the Suez Canal.
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