ARA Oil Product Stocks Hit Four-Month Lows

August 27, 2020 – Oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell this week, with stocks of all surveyed products falling except gasoil.

The total is the lowest recorded since the week to 30 April. Sudden heavy falls in oil product demand during the onset of the Covid-19 pandemic brought crude and product markets into a contango that lifted inventories to their highest level in at least 17 years during mid-June. Inventories have since fallen gradually to the four-month lows recorded during the week to yesterday.

Fuel oil and jet fuel each fell heavily. Jet stocks fell to reach their lowest since mid-May. A rare westbound arbitrage opened last week, probably a result of low northwest European jet prices. The largest single factor in this week’s stock draw was the loading of the Suezmax Dong a Thetis in Rotterdam. The tanker is awaiting orders in the North Sea. Cargoes also left the ARA region for the UK. The only incoming cargo came from the Ardmore Enterprise, which had itself been waiting in the North Sea for orders prior to offloading a part-cargo in Rotterdam.

Fuel oil stocks fell to reach their lowest since the week to 5 March. Demand for bunker fuels has been generally low since the beginning of the pandemic, and there was little sign of a sudden increase in demand over the past week. The heavy fall in inventories was more the result of the departure of a Suezmax for Singapore, as well as the departure of other tankers for the Mediterranean and west Africa. No Suezmax tankers arrived either, with smaller tankers arriving from Poland and Russia.

Gasoline stocks fell for the second consecutive week. Inventories had been at record highs, but the opening of the arbitrage route to the US boosted exports over the week. Gasoline outflows to the US are likely to continue in the short term owing to the temporary production cuts prompted by the anticipation of Hurricane Laura. Tankers also departed the ARA area for west Africa, Mexico and Canada, and arrived from the Baltics, France and the UK.

The amount of gasoline being produced in northwest Europe appeared to rise in response to anticipated firming of US demand, which in turned helped weigh on inventories of naphtha — a key component in gasoline blending. Naphtha stocks fell, weighed down additionally by fading demand from inland petrochemical end-users. Tankers arrived in the ARA area from Norway and the UK, while an LR1 departed for Brazil.

Gasoil stocks bucked the trend, rising to reach five-week highs. Diesel demand up the Rhine has been capped because of full tanks, while heating oil consumption remains subdued by warm weather. Flows from the ARA area into Germany consequently reached their lowest since at least November 2017, when Insights Global began tracking the relevant data. Gasoil arrived in the ARA region from Russia and the US, and departed for Argentina and the Mediterranean.

Reporter: Thomas Warner