Residual

The US Gulf Coast is perceived by midstream operators to offer a growing opportunity for the export of fuel oil left over from refinery processing. The US does not produce as much residual fuel oil as European refiners and the largest market is in Asia. But the US Gulf is ideally positioned to import fuel oil from Europe or Latin America to blend with domestic production and export to Asia. New terminal infrastructure is coming online to meet growing demand for storage and blending facilities. Today we look at the Gulf Coast’s largest fuel oil terminal.

The market for residual fuel oil is traditionally not attractive for refiners because prices are lower than for crude feedstocks. However, some of the world’s biggest oil traders profit from arbitrage between different fuel oil grades and locations. The Gulf Coast market is expected to expand as refiners add imported fuel oil to their feedstocks to balance lighter crudes coming their way from shale production.  In October a brand new fuel oil terminal will open on the Houston Ship Channel to help serve the growing needs of fuel oil traders. Today, appropriately “International Talk-Like-a-Pirate-Day” we begin a new series covering the Gulf Coast fuel oil market.