ARA Oil Products Stocks Rise (week 43 – 2020)

October 22, 2020 — Oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose over the past week, buoyed by a sharp rise in fuel oil stocks, according to data from consultancy Insights Global.

Overall oil product stocks rose in the week to 22 October, but the different products fared very differently. Fuel oil stocks rose on the week, the highest level since mid-July.

Market participants may be drawing cargoes together in the ARA area to send them on the arbitrage route to Singapore.

An Aframax departed for Port Said for orders, where it will either find a home in the eastern Mediterranean or travel onward to the Mideast Gulf or Singapore.

The rise in inventories was the result of cargoes arriving from the Caribbean, where a poor cruise ship season has reduced bunker fuel demand, as well as low sulphur cargoes from Germany and the US. At least one Aframax arrived from the Russian Baltic.

Gasoline inventories rose, against a backdrop of fading demand. Outflows to key export regions the US and west Africa fell on the week, and the traffic in gasoline blending components slowed. Congestion in the blending component barge market had caused loading delays as recently as the beginning of October, but there was little sign of any congestion this week as demand dwindled locally and elsewhere. Tankers arrived in the region from France, Italy, Russia and the UK.

Some gasoil barge loadings were delayed, with inland inventories high enough to prompt some market participants to delay loading barges to take middle distillates inland.

Gasoil inventories fell, and a rare fixture emerged to take European diesel to the US where the New York Harbour area is providing an outlet for the oversupplied European market.

Naphtha inventories fell to reach their lowest since March. An MR tanker departed the ARA area for Brazil, where the naphtha will be used as a petrochemical feedstock.

And it was firm demand from petrochemical end-users in northwest Europe that caused the stockdraw during the week. High prices of rival feedstocks made naphtha relatively attractive to ethylene producers, and the volume leaving the ARA for inland destinations on barges rose on the week.

Jet fuel stocks rose to reach fresh all-time highs, against a backdrop of poor demand. German airline group Lufthansa has warned of a bleak demand outlook during the winter because of Covid-19 related travel restrictions. Two tankers that had been serving as floating storage on the North Sea discharged in the ARA area, and small cargoes departed for the UK and Ireland.

Reporter: Thomas Warner