ARA gasoline inventories surge

London, 6 June (Argus) — A sharp rise in gasoline stocks pushed inventories of independently-held oil products in the Amsterdam-Rotterdam-Antwerp (ARA) region higher on the week, according to consultancy Insights Global.

Stocks rose in the week to 5 June.

Gasoline inventories jumped week on week, with cargoes coming into the ARA area coming from Finland, France, Italy, Russia, and the UK.

Relatively firm northwest European gasoline prices have left cargo arbitrages out of Europe to regions such as North and South America and west Africa unworkable in the last few weeks, which has slowed departures. The regional strength has also encouraged the arrival of cargoes from outside of the region — including from the Mediterranean — helping lift supplies at a time when regional demand has been relatively muted for the time of year. This week’s build sees gasoline stocks at their highest since early March.

The rise in gasoline stocks this week coincided with a sharp rise in trading activity. Argus Eurobob oxy gasoline barges changed hands from 3 June up to 16:30 BST on 6 June, not far off total May trading activity.

Gasoil stocks eased off this week, after rising to their highest since October the previous week. Independently-held gasoil stocks in the ARA dipped by in the week to 5 June. Gasoil stocks eased off this week as the Long Range 2 (LR2) tanker Burri departed ARA for west Africa, taking around out of inventories. Gasoil arrived into ARA this week from India, Russia, and the UAE.

But fresh cargoes are expected to keep northwest Europe well-supplied in coming weeks, with a high number of LR tankers set to arrive in the region from the Mideast Gulf and US. Diesel margins in the region have been under sustained pressure because of ample regional supply in recent weeks. Northwest European French diesel’s premium to North Sea Dated crude fell the lowest since March 2018 on 5 June.

Fuel oil stocks also dipped lower this week — with outbound flows to the Mideast Gulf and west Africa offsetting inbound flows from France, Norway, Poland and Russia. Fuel oil flows to the Mideast Gulf could be higher because of increasing power generation demand following the end of Ramadan.

But deteriorating economics for shipments to the Asia-Pacific region continue to deter exports to Singapore, where stocks recently reached a two-year high. The Singapore second-month swap premium to high-sulphur fuel oil cargo prices in northwest Europe has averaged below in the last five trading days, from in the previous five. It is the lowest five-day average since September 2017.

Jet kerosene stocks were largely stable, dipping in the week up to 5 June, with departures from the area to the UK. Jet demand has been slow to pick up ahead of the peak season, but overall demand this year is set to exceed that of last year. Stocks could soon rise — the Alburaq offloaded jet fuel on 6 June in Rotterdam, and five further tankers are scheduled to arrive in ARA by the end of this week. But Total’s declaration of force majeure on jet deliveries from its Leuna refinery in eastern Germany could push ARA supplies towards that area, which could weigh on stocks.

Meanwhile, Total booked one vessel from ARA to take of product to Immingham loading on the 5 June, likely related to maintenance works at Lindsey refinery.

Naphtha inventories in ARA jumped this week, rose. Naphtha stocks in the ARA region had rebounded from the 18-month lows recorded a week earlier. Demand from the petrochemical sector remained low as a result of scheduled maintenance at three northwest European ethylene crackers. Buying interest from gasoline blenders was also low.

Blenders typically add naphtha to gasoline in order to reduce the viscosity of the finished product, but the high inflows of finished-grade gasoline from outside the ARA area weighed on demand for the product. The general lack of buying interest, combined with the arrival of cargoes from Algeria, Norway, Russia, and the UK, brought northwest European naphtha’s discount to North Sea Dated crude to multi-year lows during the week to today.

Reporter: Robert Harvey