April 16, 2020 – The total 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 its highest level since September 2019, according to consultancy Insights Global.

Overall stocks increased, supported by rising inventories of all products except naphtha. Low demand across the oil product complex has tipped the various underlying forward curves into contango since the beginning of the Covid-19 pandemic in Europe, supporting storage economics.

Naphtha was the only product to buck the trend, with inventories falling on the week. Local petrochemical end-users consumed some local inventories, and inflows were low. Small cargoes did arrive from Russia and Spain, but in lesser volume than the prior week. Demand from gasoline blenders was virtually zero, owing to a growing supply overhang of the road fuel.

Gasoline inventories hit their highest since June 2018. Demand in Europe has dropped by more than half in major markets including Italy, France and Germany since travel restrictions came into force. And demand is also down heavily in key export market the US, where consumption was down last week by more than compared with the five-year average for the week. No tankers departed the ARA area for the US, but tankers did leave for China, the Mediterranean, the North Sea for orders, and Puerto Rico. Tankers arrived from Norway, Russia, Spain and the UK.

Gasoil inventories rose. Demand for ARA gasoil barges from Germany fell on the week, but diesel’s proportion of the gasoil volume heading into Germany rose. Market participants were heard to be bringing diesel inland to store in tanks previously used for heating oil storage, owing to a steeper contango in the former’s forward curve. Tankers arrived in the ARA area from Baltic and Russia, and departed for the UK and west Africa.

Some repurposing of storage tanks was also heard in the jet fuel market. Low demand from the aviation sector brought outright northwest European jet fuel prices to 18-year lows on 15 April, resulting in a steep contango and making it more economic to store jet fuel in tanks than to store diesel. A single jet fuel tanker arrived from South Korea while none departed.

Fuel oil stocks also rose, reaching their highest since June 2018. Tankers arrived from Russia, Latvia and the UK and departed for Malaysia. Northwest European fuel oil cargoes typically depart the region for Singapore rather than Malaysia, so it may be that the tanker will be used as floating storage offshore Malaysia but close to Asia’s key inventory hub of Singapore.

Reporter: Thomas Warner