London, (Argus) — Oil products held in independent storage tanks in
the Amsterdam-Rotterdam-Antwerp (ARA) trading hub increased by 1.7pc on
the week today to 4.9mn t. A sharp rise in fuel oil stocks outweighed
declines in every other product.
Fuel oil inventories increased by 18.5pc on the week hitting a three
week high. Cargoes arrived from France, Poland, Russia and the UK. A
Suezmax and Aframax departed for Singapore. Stocks increased ahead of
the loading of a very large crude carrier (VLCC) — the Neptun — due to arrive next week.
Gasoil stocks declined by 1.4pc to a six month low. A rise in Rhine
water levels allowed exports from ARA to reach the German inland market,
which weighed on stock levels. Cargoes also left for the US and west
Africa. Tankers from the Baltic and Russia.
Gasoline stocks fell by 1.3pc to a three week low, as cargoes
departed for west Africa and product loadings along the Rhine increased.
Products arrived from France, Germany, Sweden and the UK.
Naphtha inventories declined by 7pc. Cargoes arrived from Algeria,
France, Spain and the UK. As with gasoil and gasoline, naphtha demand
from inland Europe is likely to have increased as a result of higher
Rhine water levels.
Jet fuel stocks fell by 3.7pc, also a three week low. Exports to the
UK outweighed imports from the Mideast Gulf, which totalled just one
cargo.
London – Oil product stocks held in independent storage within the
Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell by 2.4pc on the week
today to 4.83mn t, the lowest recorded since 30 November 2017.
Fuel oil stocks fell by 13pc amid strong demand from east of Suez. The Solomon Sea left
Rotterdam on 27 November carrying a 100,000t cargo. Smaller tankers
also left the ARA area for the Mideast Gulf and west Africa. Cargoes
arrived from France, Russia and the UK.
Gasoil stocks fell by 3pc, the lowest level recorded since June. Low
Rhine water levels continued to affect the market, limiting barge flows
from the ARA into Germany. Market participants continued to use tankers
to load gasoil in the ARA area and transporting it to north German
seaports for onward distribution. Demand from inland fell on the week,
impacted by higher freight rates. Tankers arrived from Russia and
departed for Germany, France, the UK and west Africa.
Gasoline stocks rose by 1.1pc. The US Atlantic and Gulf coasts
remained well supplied, limiting interest in European gasoline from
across the Atlantic. West Africa was the only region to receive gasoline
cargoes from the ARA during the week to today. Gasoline flows into
Germany were steady but volumes of blending components coming the other
way fell on the week because of weakening gasoline refining margins.
Naphtha stocks rose by 28pc. Inventories were supported by the
contango structure in the naphtha market, resulting from an ongoing
supply overhang. Demand both from gasoline blenders and petrochemical
users remained low during the week to today, and barge flows up the
river Rhine to inland end-users dwindled. No tankers left the ARA area
and tankers arrived from Algeria, Libya, Russia, Sweden and the US.
Jet fuel stocks rose by 1.7pc to a seven-week high of 656,000t.
Tankers arrived from the east of Suez into UK ports, easing the regional
tightness seen in regional weeks, and demand was lacklustre. The Fos Picasso arrived
into Rotterdam on 27 November with 90,000t of jet fuel from the UAE but
had not offloaded at time of writing. As with other products, barge
flows into Germany were constrained by low water levels.
London, (Argus) — Oil product stocks held in independent storage
within the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose by 1.4pc
from a week earlier to 4.95mn t, after reaching an 11-month low a week
earlier.
Gasoil stocks fell by 5.1pc to 2.1mn t, the lowest level recorded
since June. Supply remained tight in Europe, prompted by disruption to
German refining activity caused by low Rhine water levels. Gasoil
premiums to North Sea Dated crude consequently averaged more than $23/bl
for the second consecutive week, for the first time since November
2012. High Rhine barge freights continued to motivate market
participants to transport gasoil volumes by tanker into northern German
ports. Tankers carrying gasoil arrived in the ARA area from Latvia,
Russia and the US, and departed for France, Germany, the UK and west
Africa.
Gasoline stocks rose by 7.9pc to 970,000t. The US Atlantic and Gulf
coasts remained amply supplied, limiting interest in European gasoline
from across the Atlantic. West Africa was the primary source of demand,
with tankers leaving the ARA for that region and for the Mideast Gulf.
Tankers arrived from Finland, France and the UK. Disruption to Rhine
traffic limited gasoline flows beyond Duisburg, where volumes are being
loaded onto trucks for transport into the hinterland.
Fuel oil stocks rose by 13.6pc to 1.04mn t, with strong demand from
east of Suez drawing cargoes into the ARA area for onward transport to
Singapore. At least one tanker left the area for west Africa, and
vessels arrived from Canada, Poland, Russia, the UK and the US. The Solomon Seais due to depart Rotterdam for Singapore on 23 November carrying a 100,000t cargo.
Naphtha stocks fell by 10.6pc to 202,000t, the lowest total since
November 2017. Tankers left the ARA area for Asia-Pacific and the
Mediterranean, and arrived from Italy, Russia, the UK and the US.
Naphtha flows into Germany remained under downward pressure from low
water levels, but naphtha demand from gasoline producers in the ARA area
was supported by blending for export to west Africa.
Jet fuel stocks rose by 1.4pc to 645,000t. Inland demand continued to
be met largely by pipeline flows with high Rhine barge freight rates
impacting the use of barges. Recent tightness in northwest European
supply drew in at least one partial cargo from the Mideast Gulf, while a
single tanker departed for the UK.
This is the second blog article of our series of 5 blog articles made for you to be able to better understand the drivers and the complexity of the tank storage industry. In the first article we took a closer look at the functions of a tank terminal.
HOW DO TRADERS MAKE MONEY?
Traders can take a physical (&paper) position and ‘buy low / sell
high’ to be able to make profit. There are several strategies to profit
from trading physical commodities. We can distinguish three main
strategies:
1.
Arbitrage
2.
Speculation
3.
Optionality
ARBITRAGE
Arbitrage is a very simple idea, it is really taking advantage in the
difference of price on essentially the same product, to make profit.
For example if you would have the price of gasoline in two different
geographical markets. These different markets can be the Netherlands (A)
and the US (B). If in market A the price would 1 dollar and in market B
the price would be 2 dollars, then you can profit from the difference
in price. The three main types of arbitrage are:
1.
Geographical arbitrage
2.
Time arbitrage
3.
Technical arbitrage (blending)
SPECULATION
The U.S. Commodities Future Trading Commission defines a speculator
as a trader who does not hedge, but who trades with the objective of
achieving profits through the successful anticipation of price
movements. Traders take a position in anticipation of moves in
prices/spreads. For example with the gasoil price as is shown in the
chart below:
OPTIONALITY
As for speculation, also for optionality volatility is key. Profit
can come from market opportunities, where traders can limit losses if
market turns against position. Three examples are:
Optionality during geographic arbitrage trade. For example divert ship if there is a better deal and reduce costs
Optionality during contango storage. Contango means that the spot price of oil is lower than future contract for oil
Optionality in transport mode. Can be applied when transport costs are market driven and volatile
CONCLUSION
More familiarity within this complex market can provide you with
quick insights derived from the financial markets. By watching and
following oil prices spreads and market volatility can provide you with a
better picture of the market. Other trends like backwardation and
contango are also important to understand and analyse, to be able to
make intelligent decisions. More to come in the next blog article next
week, meanwhile feel free to download last week’s tank terminal report.
And try to test your comprehension of the subjects discussed.
For more information or any questions please do not hesitate to contact us.
London, (Argus) — Oil product stocks held in independent storage
within the Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell by 11pc
from a week earlier to 4.88mn t, the lowest level recorded since
December 2017.
Gasoil stocks fell by 7pc to 2.2mn t, the lowest level recorded since
5 July amid tight supply in Europe. The Swiss government released more
gasoil from its strategic reserves today, in order to alleviate
persistent supply disruptions. Barge freight rates from the ARA area to
Switzerland have risen to around SFr180/t, up from SFr20/t at the
beginning of July. Tankers arrived in the ARA area from Russia and the
UK, and none departed.
Gasoline stocks fell by 4pc to 899,000t, the lowest level since 13
September. Several tankers left for Mexico and for Nigeria, and vessels
also departed for the US and Mideast Gulf. Tankers arrived in the ARA
from France, Russia and the UK. Northwest Europe remained amply supplied
and flows into Germany continued to outstrip those coming out, in a
reversal of the usual pattern.
Fuel oil stocks fell by 27.4pc to 913,000t. The Frio departed
Rotterdam during the reporting period carrying a 130,000t cargo to
Singapore, and two other vessels also left the area carrying fuel oil
cargoes. Demand from east of Suez remained strong, drawing cargoes into
the ARA area for future eastbound loadings. Tankers arrived in the area
from Latin America, Russia and Spain during the week to today.
Jet fuel stocks fell by 1.2pc to 636,000t. Inland demand continued to
be met largely by pipeline flows and there was an uptick in buying
interest for dual purpose kerosine, likely from the UK. Stocks remained
low as recent backwardation in Ice gasoil futures made storage economics
unviable. In addition, some cargoes originally destined for northwest
Europe from the US and east of Suez have been diverted to the Caribbean
and Africa, limiting prompt availability.
Naphtha fell by 13.4pc to 226,000t. Outflows to inland end-users
remained under downward pressure from problems arising from low Rhine
water levels. But demand from gasoline blenders in the ARA area appeared
higher, amid increasing gasoline outflows from Europe. A single tankers
arrived in the ARA area from the UK, and none left. Eastbound arbitrage
economics have become unviable on benchmark paraffinic grades over the
last week amid ample supply in Asia-Pacific.
Argus) — Oil product stocks held in independent storage within the
Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose by 3.3pc from a week
earlier to 5.48mn t, prompted largely by a sharp rise in fuel oil
stocks.
Fuel oil stocks rose by 33.3pc to a seven-week high of 1.26mn t. The Eagle San Francisco and the Frio — both
Suezmax-sized tankers — are currently in Rotterdam awaiting loading.
Firm demand from east of Suez continues to draw smaller cargoes into ARA
for loading into larger tankers. Tankers arrived in the ARA area from
Canada, France, Latvia, Russia, Spain and the UK. A single tanker left
the area for west Africa.
Naphtha stocks also rose, increasing by 8.3pc to 261,000t. Outflows
to inland end users remained under downward pressure from problems
arising from low Rhine water levels. Naphtha demand from gasoline
blenders in northwest Europe also remained low. Dwindling demand from
end users in Asia-Pacific limited viable outlets for European naphtha,
helping to bring outright prices to their lowest since February, at
$545.50/t. Vessels arrived from Algeria, Finland, France, Norway and the
UK. None left the area.
Jet kerosene stocks rose by 2.9pc to 644,000t. The Pro Triumph arrived
into Rotterdam on 4 November carrying an 80,000t jet fuel cargo from
India, and a single tanker departed for the UK. Steep backwardation in
underlying Ice gasoil futures made the economics of storing jet fuel in
tank unattractive, creating an incentive for end users to consume
purchased volumes promptly.
Stocks of gasoil fell by 133,000t to 2.38mn t, the lowest level
recorded since 19 July, amid tight supply in Europe. Margins for French
10ppm diesel cargoes on a cif Le Havre basis climbed to $23.85/bl
against North Sea Dated yesterday, from $20.48/bl a week earlier — to
their widest point since November 2012. Margins have averaged some
$14.69/bl in the year to date. Tankers arrived in the ARA area from
Russia and the US, and departed for the UK, west Africa and Germany. Low
Rhine water levels have prompted market participants to transport
gasoil to north German ports on tankers, before sending them inland via
rail.
Gasoline stocks fell by 42,000t to 943,000t, the lowest level since
late 20 September. Remaining supply of summer-grade product helped
incentivise bookings to Argentina and Australia. Tankers also left for
Latin America, China and west Africa. Tankers arrived from Denmark,
France, Italy, Norway and the UK. Northwest Europe remained amply
supplied. As with gasoil, gasoline was increasingly being transported
into inland Germany by rail in response to low Rhine water levels.
(Argus) – Oil product stocks held in independent storage within the
Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell by 2.6pc from a week
earlier to a nine-week low of 5.3mn t, prompted by falling stocks of all
recorded products.
Naphtha stocks fell by 16pc to 241,000t, the lowest level since 11
May 2018. Outflows to inland end-users were marginally higher than the
level recorded a week earlier. Tankers arrived from Russia and the UK,
and none were reported leaving the area. Northwest European naphtha
prices are at their lowest since April, inhibiting arbitrage inflows
from other regions.
Stocks of gasoil fell by 51,000t to 2.51mn t, the lowest level
recorded since 30 August, amid firm demand. German 10ppm diesel barge
differentials have found support across the last week, potentially aided
by a brief recovery in Rhine water levels. Water levels rose to 53cm at
key measuring point Kaub today, according to shipping reports, from
just 27cm on 24 October — allowing a greater number of barges to access
firm demand from German inland markets. Diesel barge differentials
climbed to premiums of $5/t against Ice November gasoil at the close of
October, from premiums of $3.75/t on 25 October. Tankers arrived in the
ARA area from Saudi Arabia and the US, and departed for the United
Kingdom.
Gasoline stocks fell by 11,000t to 985,000t. Volumes heading up the
Rhine into Germany were higher than those coming the other way, with
refinery activity in the country impeded by low water levels and
outages. Tankers departed for the Mideast Gulf, Suez for orders and the
UAE. Tankers arrived from Finland, France, Spain, Sweden and the UK.
Fuel oil stocks fell by 2.4pc to 944,000t, the lowest level since the
first week of April amid firm demand from east of Suez. The fall in
inventories was prompted by the loading and departure of at least two
Suezmax-sized cargoes during the week to today. Tankers arrived in the
ARA area from Latvia, Poland, Russia and the UK.
No jet kerosene cargoes arrived in the ARA area during the week to
today, and inventories reached their lowest level since 17 May at
626,000t. Backwardation in underlying Ice gasoil futures made the
economics of storing jet fuel in tank unviable.
(Argus) Oil product stocks held in independent storage within the
Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell by 7.6pc from a week
earlier, prompted by a drop in stocks of all products recorded except
gasoline.
Stocks of gasoil fell by 11pc to 2.56mn t hitting their lowest level
since early September. A lack of incoming cargoes from the US and the
Mideast gulf because of higher demand in other key import regions meant
that outflows outstripped incoming volumes. Tankers arrived in the ARA
area from France, Spain and the UK and departed for Latin America, South
Africa, the US and west Africa. Low water levels on the Rhine impacted
gasoil flows into Germany further this week.
Most Rhine gasoil barges stayed north of Koblenz, but some passed the
bottleneck at Kaub in response to strong demand from upper Rhine
destinations. Margins for French 10ppm diesel cargoes on a cif Le Havre
basis climbed to $17.59/bl against North Sea Dated yesterday, the widest
since 15 August according to Argus data.
Fuel oil stocks fell by 6.8pc to their lowest level since the first
week of April, prompted by firm demand from east of Suez. The fall in
inventories was prompted by the loading and departure of at least three
cargoes during the week to Thursday. The SCF Ural and Chios departed for Singapore during the reporting period carrying 140,000t cargoes, while the Advantage Spring departed with a 130,000t cargo. Tankers arrived in the ARA area from Estonia, the Mediterranean, Russia and the US.
Gasoline stocks were broadly unchanged. Outflows were again supported
by exports of summer grade product to destinations in the southern
hemisphere. Eurobob oxy gasoline is currently trading at a 43¢/bl
discount to North Sea Dated crude for the first time in over seven
years, with supply outstripping demand in key export markets. Tankers
departed for Latin America, South Africa, the US and west Africa.
No jet fuel cargoes arrived in the ARA area during the week to 25
October, and inventories reached their lowest level since 17 May.
Naphtha stocks fell by 16pc, their lowest level since 6 September.
Low Rhine water levels again weighed on demand from inland petrochemical
end-users.
Tankers arrived from Finland, France, Norway and Poland. Europe
remains under a naphtha supply overhang amid low demand from gasoline
blenders and petrochemical end-users, prompting a sharp rise in
eastbound bookings.
London, 18 October (Argus) — Oil product stocks held in independent
storage within the Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell by
4.1pc on the week today, as a result of a significant drop in gasoil
volumes.
Stocks of gasoil rose fell by 5.3pc to their lowest in four weeks
(see table). Cargoes arrived from Russia and departed for France, the UK
and the Mediterranean. Demand from along the Rhine remained muted,
particularly in the upper Rhine area.
Gasoline stocks fell by 7.1pc. Ample supply weighed blending margins,
boosting outflows. Tankers left for Australia, Latin America,
Singapore, the US and west Africa.
Fuel oil stocks rose slighlty. Tankers left the ARA area for Singapore and west Africa, and the Chios was
still in ARA partially loaded today. Tankers arrived in the area from
France, the Mediterranean, Latvia, Poland, Russia and Spain.
Naphtha stocks edged up, with demand from within Europe subdued amid
narrow gasoline blending margins and transport issues on European
waterways.
Click here if you missed Part 1 of the article “Greater Singapore Tank Storage Market Outlook 2018”.
Singapore naturally has a vast deficit of fuel oil as local
production is only modest while demand is of unparalleled size. Large
imports of fuel oil allow Singapore to fulfill its hub function.
THE IMPACT OF IMO 2020 – A GAME CHANGER
Fuel oil demand primarily comes from marine bunker activity and is
therefore submissive to a large change following the IMO 2020
regulations, which require lower sulphur contents to be used in marine
fuel.
Fuel oil generally is high on sulphur and will thus see a sharp
decline in demand from 2020 onwards when high-sulphur fuel oil is
replaced by, among other alternatives, diesel oil. After 2020 demand
will gradually pick up as a result of growing economies and populations,
but its share in marine bunkering will remain low.
The immediate switch from fuel oil to alternatives will provoke a
surplus of the product for most countries in the region, while Singapore
will continue to have a deficit, be it smaller than before. The region
in whole will have a surplus in the short run, lowering fuel oil trade
flows from other continents to Asia.
TRADE IMBALANCES WILL CONTINUE INTENSIFYING TANK STORAGE USAGE
Diesel is Far East and the ISC’s largest refinery output category and
together account for roughly 50% of the total. The main drivers for
diesel demand are passenger cars with diesel engines, marine bunkers,
building heating and industry. Passenger car fleet developments are of
great importance to the demand for diesel. Since diesel does not propel
the majority of cars in Far East and the ISC, the impact of car
emissions regulations on diesel demand is limited. With growing
populations and developing economies, the number of diesel-powered
passenger cars is set to further increase in the future, despite more
efficient engines, the increasing share of electric vehicles in the
passenger car fleet and other environmental initiatives. IMO 2020
regulations, will increase the demand for diesel in the maritime sector.
As of 2017 most of the region’s major producers and consumers of diesel
have surplusses with the largest ones in China, India and South Korea.
Australia, on the other hand, has quite a substantial deficit, meeting
most of its diesel demand with imports.
China is the region’s largest producer of gasoline, followed by India
and Japan. India and China have seen tremendous growth in their
gasoline productions, both having doubled their output since 2009. The
primary demand driver for gasoline is passenger cars, accounting for
virtually the entire gasoline consumption. Passenger car fleet
developments are therefore of even greater importance to gasoline than
for diesel. Chinese demand for gasoline has more than doubled over the
last decade despite strict emissions regulations but hasn’t outgrown
production yet. Demand for gasoline is very sensitive to changes in car
fuel usage, but the growing Chinese economy offsets the strict fuel
policies of the country. India’s demand is still relatively low but
growing rapidly, while Japanese demand naturally seems to be in decline.
As for diesel, most of the major producers/consumers of gasoline had
surplusses of the product in 2017.
Fuel oil has historically been Far East and the ISC’s third largest
oil product in terms of demand. Simultaneously it’s Singapore’s largest
product in terms of demand and trade volumes, since the country acts as
the region’s largest marine bunker fuel hub. Local production is
negligible, however, and Singapore fulfils demand through imports. The
region has a deficit of the product despite increasing local production.
Most fuel oil is produced by China and Japan, with China increasing its
production while Japanese production is in decline. South Korean and
Indian production is likewise in decline. Due to its hub function
Singapore has the largest demand for fuel oil in the region, as a
variety of ships from many different countries come to Singapore in
search for the right propellant. China comes second in terms of demand,
while Japanese fuel oil demand is only a third of what is was half a
decade ago.
CONCLUSION
Relevant market fundamentals for the oil storage business are the
shape of the forward curve, the competitive market structure and the
logistical factors supply, demand, imbalances and trade flows. Tank
terminals are part of the oil products supply chain and therefore
logistical factors such as local product demand, regional refinery
output, imbalances and trade flows are very relevant. Developments in
these factors, as well as new regulations influence the demand and
requirements for tank terminal capacity.
SINGAPORE TANK TERMINAL MARKET STUDY 2018
Based on extensive market research, Insights Global – in partnership with Ener8 Limited – has produced a +75 pages report providing insights into the Tank Terminal Market in both Singapore and the greater Singapore area.