By Ron Bousso
LONDON, Feb 11 (Reuters) - An above-average number of gasoline cargoes from Europe to the U.S. East Coast was booked in the first week of February as refiners sought profit on expectations of tighter U.S. supplies.
The window for the trans-Atlantic trade, or arbitrage, was opened throughout last week after Hess Corp announced on January 28 it will close down its East Coast refinery in February.
According to traders brokers, 11 37,000-tonne tankers had been fixed on the west-bound route so far in February, a relatively higher number than in January, which saw a total of 31 medium range tankers booked.
Between 20 to 30 tankers had been shipped on the route over the past three weeks, they said.
Such volume is seen as unusually high for winter months, when demand for gasoline in the United States is at its lowest.
The planned shutdown of the Hess 70,000-barrel-per-day (bpd) Port Reading, New Jersey, refinery followed a slew of shutdowns in the densely populated region, pushing U.S. gasoline prices higher.
U.S. gasoline front-month futures, known as RBOB, quickly rose to above $3 a gallon, their highest level since September, and remained above that level throughout last week.
'The discretionary trans-Atlantic arbitrage wind down was opened wide after the Hess refinery shutdown but was really closed after U.S. gasoline prices came down last week,' a trader said.
Refiners weigh the arbitrage's economic viability using a model taking into account the price of the gasoline components as well as freight costs and calculating the netback.
The demand from the East Coast caused a spike in gasoline refining margins in Europe, which rose on Feb. 4 to $12.433 a barrel, their highest level since mid-October.
That, in turn, drove U.K. petrol prices at the pump to 136.28 p/litre on Sunday, close to record highs of 142.48 p/litre reached in April 2012.
Transatlantic medium range tanker earnings averaged $18,000 a day in January and reached over $23,000 a day in early February - the highest level seen since late 2011. Average earnings fell to $21,125 a day on Monday, Baltic Exchange data showed.
The arbitrage window was nevertheless seen as closed on Monday after Delta Air Line Inc. restarted its 185,000 bpd Trainer refinery.
'A restart is now imminent which will ease conditions on the U.S. east coast,' consultants MSI said.
Further relief to East Coast gasoline supplies is expected when the Colonial Pipeline ramps up distillates shipping capacity from Houston refineries.
Reduced demand for gasoline from West Africa, a regular arbitrage fixture from Europe, is further weakening European gasoline cracks, traders said.
(Reporting By Ron Bousso and Jonathan Saul; Editing by Bob Burgdorfer) Keywords: GASOLINE ARBITRAGE/US
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