Gasoil, fuel oil lead ARA stocks rise
London, 16 May (Argus) — Weaker gasoil and fuel oil demand led a rise in overall oil product stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) region, and offset a decline in remaining product inventories, including gasoline.
Russian crude imports through the Druzhba pipeline to Germany were stopped on 25 April because of a contamination problem. The issue led to a draw in independent gasoline stocks in the ARA region after regional blenders looked to fill supply shorts in inland Europe, particularly Germany and Poland. A rare shipment took a gasoline cargo to a north German port from the ARA storage hub, according to consultancy Insights Global. Inland flows are typically carried by barge, or in the opposite direction for stock building. Shipments of gasoline from the Mediterranean region to northwest Europe have also surged in recent weeks following the pipeline issue.
Stronger prompt gasoline prices in northwest Europe have diminished arbitrage opportunities out of the region, while steep backwardation in the gasoline market is encouraging volumes to move out of storage. Supply is likely to tighten further as a technical issue yesterday forced the closure of Total’s Leuna refinery in southeastern Germany. The firm declared force majeure on rail deliveries of oil products from the facility.
This adds to the unplanned shutdown of Total’s Grandpuits and a turnaround at the firm’s Donges refineries. One of the two crude distillation units (CDUs) at BP’s Rotterdam refinery in the Netherlands, is also under maintenance.
Reduced diesel exports from Primorsk in May, following a decrease in scheduled loadings and bankruptcy proceedings at the Antipinsky refinery, have tightened the northwest European market. But the impact of the Druzhba pipeline issue on the diesel market has been less pronounced, largely as a result of relatively higher inventories and lower demand compared with gasoline. Gasoil stocks rose following arrivals from Russia, the US and Latvia, while product was exported to Argentina, Ireland, UK and west Africa.
Naphtha stocks in the ARA region fell from four-week highs the previous week, on steady demand and reduced incentive to bring product into the storage hub. Buying interest for open-specification product has come under downward pressure from unusually high levels of scheduled maintenance in the petrochemical sector. But demand for blending grades was supported by firm gasoline demand from inland destinations.
Jet fuel inventories remained steady in the week to 16 May on limited demand, as most imports from east of Suez arrived into UK and French ports. In addition, estimated arrivals into northwest Europe this month have declined to 1.5mn t, from 2mn t previously, following diversions to African destinations.
Weaker arbitrage economics to take fuel oil to the Asia-Pacific region from northwest Europe supported stock levels. Inventories in Singapore reached over a two-year high of in the week to 10 May. Despite unviable export economics, Gunvor chartered a very large crude carrier (VLCC) to load fuel oil in Rotterdam to Singapore.
Reporter: Rowena Caine