ARA Oil Product Stocks Reach Seven-Week Highs

2 April, 2020 (Argus) – The total volume of oil products held independently in storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and trading hub rose during the past week, according to the latest data from consultancy Insights Global.

Overall stocks increased on the week, supported by sharp rises in jet fuel and naphtha inventories. Stocks of gasoline also rose amid poor demand, while gasoil and fuel oil inventories both fell slightly on the week.

Naphtha inventories rose on the week to reach their highest since Argus began collecting the relevant data in January 2011. The rise in stocks was the result of very low demand from gasoline blenders and a week on week fall in naphtha barge flows to petrochemical end-users along the river Rhine. Tankers arrived in the area from Italy, Norway, Russia and the UK but none departed. Naphtha is so oversupplied in Europe that more than 1mn t has already been booked to leave the continent for Asia-Pacific during April.

The lack of naphtha demand from gasoline blenders was the result of a global lengthening of gasoline supply. Road fuel demand has fallen everywhere that measures to slow down the spread of the coronavirus pandemic have been implemented. Gasoline demand in northwest Europe and in key export region North America was low during the reporting period, and no tankers departed for the US. Tankers left the ARA area for the Mediterranean, Mexico and west Africa, and arrived from France, Spain, Sweden and the UK.

Weak demand caused by widespread flight cancellations pushed jet fuel stocks to 11-week highs in the week to today. Cargoes originally destined for northwest Europe continued to be diverted elsewhere, although one cargo did arrive from South Korea. The contango in the forward curve reached its steepest since 1993 during the reporting period, and a rise in inflows is likely with at least one more South Korean cargo currently discharging.

Gasoil demand in northwest Europe has been strong in comparison with other products, supported by inland buyers filling up their storage tanks while outright prices are under such heavy pressure. But the effect continued to taper off during the past week as inland tanks filled up, and the volume of diesel departing the ARA area for inland discharge fell heavily on the week. Gasoil inventories fell despite the drop in barge flows amid lower imports. Tankers arrived from Russia and departed for the UK. Retail sales are under heavy pressure owing to the reduction in motor vehicle use.

Fuel oil stocks in ARA fell, amid viable arbitrage economics to Singapore. Demand for bunkering fuels was low but so were imports, which arrived from the Baltics, Norway, Russia and Sweden. Tankers departed for the Mideast Gulf, Denmark, the Mediterranean and Singapore.

Reporter: Thomas Warner