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Fuel oil build bolsters ARA independent product stocks

London — Oil products held in independent storage tanks in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub increased by 2.4pc on the week today to 5.03mn t.

Fuel oil inventories increased by 22pc on the week to reach an eight week high (see table). The very large crude carrier (VLCC) Neptun is currently awaiting loading in Rotterdam for east of Suez discharge. Tankers arrived from France, Italy, Russia and the UK. Fuel oil stocks can be subject to greater changes as a result of the use of larger tankers to carry cargoes eastward.

Gasoil stocks declined by 5.1pc to their lowest level since 21 June. Inland buyers took advantage of a recovery in Rhine water levels to replenish stocks of diesel and heating oil. Liquidity in the German 10ppm diesel fob ARA barge market has doubled in the last two weeks. German diesel barges also moved to a premium to their Hamburg-delivered cargo counterparts, likely encouraging the sale of smaller parcels for shipment up the Rhine. Tankers arrived in the ARA area from the Baltic and Mediterranean regions, and departed for the UK and west Africa.

Gasoline stocks fell by 1.8pc to a six week low. Cargoes departed for the Mideast Gulf, Canada, the US and west Africa. Transatlantic and west African demand rose on the week, drawing more gasoline out of the area, and flows of gasoline blending components from inland destinations rose to support ARA inventories. Gasoline cargoes arrived from Denmark, Finland, France, the Mediterranean and the UK.

Naphtha inventories rose by 6.3pc as a result of a steady flow of incoming cargoes. Tankers arrived from Algeria, the UK and the US while none departed. Demand from inland petrochemical end-users rose, again supported by the rise in Rhine water levels.

Jet fuel stocks fell by 1.7pc to reach their lowest level since 11 May. A tanker arrived from Finland, likely for use in gasoil blending. A single tanker was recorded leaving for the UK.

Reporter: Thomas Warner

What technology area do you expect to be a game-changer?

Welcome to “GRIPPING THOUGHTS”, the space created by Insights Global where Clients, Partners and Friends are invited to share ideas and insights that help shedding light on the challenges that the Oil & Gas industry faces, in the near and long future.

So join us and get inspired by IVAR BERNTZ, Research Analyst in the Cross-Industry and Advanced Manufacturing Group at GARTNER :

“Gartner recently released the results of their 2019 CIO Survey Oil and Gast Industry insights , based on 84 responses out of the 3,102 overall respondents from 89 countries. Let us discuss two of the questions posed, namely: 1) What is your organization’s top priority for 2018/2019? and 2) What technology area do you expect to be a game-changer for your organization?

Through 2018 oil and gas firms have made continued significant progress improving efficiency. With improving balance sheets and leaner operations, it is unsurprising that oil and gas executives are strongly focused on revenue and business growth as their top priority, as stated by 28% of the respondents. Caution, however, is still in evidence since the recovery is recent and market conditions remain volatile. Operational excellence  provides a relatively low-risk route to growth and profitability and is the priority for 26% of respondents.

Oil and gas company executives, senior leaders and functional managers are embracing digital. This year 22% of survey respondents rated it as top priority, compared with only 8% last year. Recognition of the capacity of digital innovation to both optimize and transform business models has crossed a tipping point in the industry, significantly elevating digital as a priority. Nevertheless, companies in most other industries are more likely to prioritize digital, a sign that traditional oil and gas industry inertia has not disappeared. Progress may be rapid by oil and gas standards but is only just keeping pace with trends outside the industry.

The oil and gas industry’s striking enthusiasm for analytics continues unabated, with 44% of oil and gas CIOs expecting data analytics to be the top game-changing technology  for the industry this year — double the percentage across  industries. Despite occasional mixed results and scepticism of vendor promises, analytics has gained widespread acceptance based on multiplying use cases and demonstrated value. As digital ambitions intensify, analytics is consistently prioritized by oil and gas leadership seeking proven ways to derive business value from digital technologies.

The greatly elevated priority of the IoT is new, with 24% of respondents now identifying it as a game-changing technology compared to 8% last year. As companies deal with existing inefficiencies, continued pursuit of operational excellence demands new strategies to improve asset performance, driving greater use of analytics for simulation and prediction of future behaviour. Analytics’ focus also shifts from reactive modelling offline to nearer real time. IoT offers advantages in data collection and system responsiveness over legacy systems to support this. However, cost-benefit considerations have so far acted as a brake on adoption, especially on mature assets. With renewed business growth the comparative advantages (and increasing cost-effectiveness) of IoT promise performance differentiation that will accelerate take-up.

A stark difference between oil and gas and all industries is apparent in artificial intelligence/machine learning. Across all industries, artificial intelligence/machine learning is ranked as the No. 1 game-changing technology across all three categories of performers, with 40% of top performers placing it at the top. While it is the third-most-cited, game-changing technology in oil and gas, only 21% of industry CIOs rate it as the top technology.

In part, this reflects the natural mistrust of the industry to hyped technology. Many oil and gas operators are still exploring ML and AI use cases and have yet to operationalize it. Understanding is more concrete for other technologies today, which — given the asset-centric nature of the business — are also expected to deliver significant value leading to a more even spread of expectation. Nevertheless, the growth of AI and ML, along with the elevation of IoT, indicates a shift in focus in the industry toward greater real-time connectivity and prediction for asset optimization.

Given this background, what do you believe will be your organization’s top priority for 2019 and what technology will be a game changer to accomplish it?”

PS: if you want to contribute to “Gripping Thoughts” please send an email to acavalcanti@insights-global.com
Find here other “Gripping Thoughts” articles:

Read now the interview with Bertrand Chupin, VP of the Loading Systems business unit of TechnipFMC, a global leader in subsea, onshore/offshore and surface projects, with about 37,000 employees.

ARA independent product stocks rise on fuel oil build

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.

ARA independent product stocks at one-year low

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.

ARA Independent Product Stocks Rise on the Week

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.

Reporter: Thomas Warner

Profit drivers for physical traders

Download TT week report

INTRODUCTION

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.

ARA independent product stocks reach 11-month low

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.

Reporter: Thomas Warner

ARA independent product stocks rise

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.

Reporter: Thomas Warner

ARA independent product stocks lowest since August

(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.

Reporter: Thomas Warner

ARA independent product stocks fall

(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.

Reporter: Thomas Warner