Shipping constraints limit flow of European gasoline to the US

London (Platts)--6Sep2005

Despite a significant draw of barrels to the US in the aftermath of
Hurricane Katrina, a lack of available and appropriate shipping is limiting
the potential for refined gasoline to reach the US from Europe, traders said.

     Following the destruction of US production and refining assets in the
southern US Gulf of Mexico states, the Paris-based International Energy Agency
has called on member states to release refined products to the US to ease
supply concerns.

     But traders have said the limited number of vessels in Europe would
severely restrict supply. "The IEA news took the sting out of the prices but
in reality there is no way for any gasoline from Europe to get to the US.
There are no ships out there on prompt dates in the Med or in NW Europe," one
trader said.

     Since the IEA's call for 2-mil b/d stock release from member countries
Friday, European 10ppm, sulfur-free, gasoline barges in the trading hub of
Amsterdam-Rotterdam have retreated nearly $100/mt to be assessed by Platts at
$771.50/mt Monday.

     Traders said the temporary waiving of the Jones Act, which allows for
non-US flagged vessels to move between US ports, could exacerbate the limited
number of ships in Europe.

     "With all the action being the US, owners are unlikely to do the backhaul
trip to Europe. We will see vessels staying in the US and Europe will only get
tighter," one trader said.

     Gasoline values in Europe were easing with the expected stock release set
to improve availability, which had been severely depleted last week as the
market shipped every available barrel of gasoline to the US, traders said. 

     "It's all about the number of molecules in the market as a whole," one
trader said. "European prices will fall even if no fuel moves to the US as
depleted volumes are replaced in Europe," the trader said.

     Improving sentiment was also seen easing pressure in the markets in the
US and Europe. "Sentiment is a powerful beast. It can move markets more than
fundamentals," one trader said. "Traders realize that every effort is being
made to ease the situation in the US and it makes a difference to price," the
trader added.

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