Independent ARA Oil Product Stocks Hit Four-Year Highs

May 7, 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 to reach their highest since April 2016, according to the latest data from consultancy Insights Global.

Overall stocks reached their highest since 7 April 2016 during the week to yesterday, with inventories of all surveyed products rising for a second consecutive week. The week on week increase meant that total inventories have now risen since underlying crude prices began plummeting in early March. Falling crude prices and low consumer demand prompted a steep contango in the forward curves of the relevant markets, making storage the most attractive course of action for many market participants. Inventories of most products have reached high capacity, with the remaining tank space already fully allocated.

Fuel oil and naphtha inventories reached their highest since Argus began recording the data from Insights Global in January 2011. Fuel oil stocks rose on the week. 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 France, Sweden, the UK and the US.

Naphtha stocks rose, after a fall in demand from petrochemical end-users along the river Rhine. Rival petrochemical feedstocks are being used in increasing quantities by end-users around Europe, and BASF even offered a naphtha cargo in the afternoon trading window on 5 May. And naphtha demand from gasoline blenders was also very low during the reporting period, weighed down by poor road fuel demand. Tankers arrived from Algeria, Norway, Russia and the UK while none departed.

Gasoline inventories reached their highest since January 2019, but came within of their highest level on record. Outflows to China, where the recovery in end-user demand is further advanced than it is in Europe, remained high. Tankers also departed for the US, west Africa and Mexico. Tankers arrived in the ARA area from Denmark, France, Italy, Russia and the UK.

Gasoil inventories reached their highest since January 2020. The volume of gasoil arriving on tankers fell slightly on the week but remained high, with tankers arriving from Norway, Russia, Singapore and the US. Demand from inland also slowed on the week, impacted by increasing competition for barges as water levels fall and market participants work to move cargoes between tanks to make space for incoming tanker cargoes.

Jet fuel stocks reached their highest since July 2019, with low consumer demand again making storage the only real outlet for cargoes. The volume arriving in the area rose on the week, with tankers arriving from Asia-Pacific as well as Singapore. Jet fuel refining margins turned negative in northwest Europe on 4 May for the first time ever on low demand and rising inventories.

Reporter: Thomas Warner

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