Independent ARA Oil Product Stocks Hit 8-Month Highs

April 30, 2020 – The volume of oil products held independently in storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and trading hub rose during the past week, supported by low consumer demand, according to the latest data from consultancy Insights Global.

Overall stocks reached their highest since August 2019 during the week to yesterday, with inventories of all surveyed products rising. The increase was the highest week on week rise in percentage terms since 11 January 2018. Low consumer demand has prompted a steep contango in the forward curves of the relevant markets, making storage the most attractive course of action for many market participants. Storage tanks in the Mediterranean are likely to be full by mid-May as a result, while in the ARA area overall independent storage capacity has been filled. It now appears impossible to rent storage tanks in the area, as the outstanding has already been allocated.

Gasoil recorded its highest week-on-week rise since September 2018, gaining to reach its highest since 6 February. The arrival of three Aframax and one Suezmax tanker carrying gasoil from Saudi Arabia buoyed inventories, as did the arrival of cargoes from Russia and the US. The volume departing ARA for delivery along the river Rhine rose on the week, reflecting an increase in diesel demand from German consumers. Heating oil flows up the Rhine were also at elevated levels. Northwest European heating oil quotes reached their lowest since at least 2008 on 22 April, while the contango in the Ice gasoil forward curve made storage an attractive option.

Gasoline inventories recorded the smallest rise of any surveyed product. Small cargoes arrived in the ARA area from Finland, France, Italy, Russia, Spain and the UK. Tankers departed for Mexico, Singapore and Port Said for orders. The volume of gasoline — including blending components — arriving into the area from inland Germany reached the highest weekly total since Insights Global began recording the relevant data in 2017. High gasoline inventories inland and low consumer demand in Germany prompted refiners to transport blending components to the ARA rather than storing them locally, adding further support to ARA stocks.

Fuel oil, jet fuel and naphtha all recorded double-digit stock increases. Fuel oil inventories reached their highest since June 2018. Low demand for bunker fuels locally and high freight costs closing the arbitrage route to Asia-Pacific provided little outlet for fuel oil. And tankers arrived carrying cargoes from Italy, Russia and Spain.

Jet fuel stocks reached their highest since 5 December, with low consumer demand again making storage the only real outlet for cargoes. At least one tanker did arrive from Asia-Pacific, while one departed for the UK. Jet fuel prices in northwest Europe fell to fresh 21-year lows on 27 April on concerns over future air travel demand once restrictions have eased.

And naphtha stocks reached their highest since August 2019, again prompted by low end-user demand and a steep contango in the forward curve. The volume of naphtha leaving the ARA for destinations along the river Rhine fell on the week, pushed down by an almost total lack of buying interest from gasoline blenders.

Reporter: Thomas Warner