Author: Greta

ARA Oil Product Stocks Fall Heavily (week 49 – 2020)

December 03, 2020 -Inventories of oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub have fallen sharply over the past week as poor regional demand prompted a rise in seaborne exports.

Total oil product stocks fell in the week to 2 December, the steepest week-on-week decline since January, according to data from consultancy Insights Global. Regional demand was subdued by tightened lockdown measures in key markets France and Germany, and low Rhine water levels which inhibited traffic on the route between the ARA area and the European hinterland.

Gasoline stocks were lower, with shipments to the US and west Africa both rising on the week. Gasoline cargoes also departed ARA for Singapore, Mexico and Canada. Weak demand within northwest Europe pushed gasoline refining margins into negative territory yesterday for the first time since August. Germany is extending its partial lockdown until 10 January. England moved out of its national lockdown this week and has transitioned to a regional tier system of restrictions. France will ease its lockdown on 15 December if Covid-19 cases continue to decline, but restrictions such as a night-time curfew will remain.

Lacklustre regional demand for road fuels demand also affected gasoil inventories ARA, with cargoes departing for Argentina, the UK and the US. Middle distillates demand is less vulnerable to coronavirus restrictions than gasoline demand owing to its use in haulage and industrial activity, but the European market is still oversupplied. The trade in diesel and gasoil barges along the river Rhine was hampered by low water levels over the past week, which restricted loadings on some routes.

Naphtha stocks fell by more than any other surveyed product in percentage terms, dropping on the week. At least one cargo departed ARA for Brazil, where it will be used as a petrochemical feedstock. Naphtha demand from petrochemical customers along the river Rhine was robust but slightly lower on the week. Low water levels meant that more barges were required to carry a slightly lower volume than went inland a week earlier. Small naphtha cargoes arrived in the ARA area from Algeria and Russia. Baltic naphtha cargoes have tended to flow into New York Harbor rather than the ARA area in recent weeks because of a lack of gasoline blending activity.

Jet fuel stocks fell to their lowest weekly level since late 27 August, amid a rise in shipments to Ireland and the UK, where commercial air travel is expected to pick up as lockdown measures ease.

Fuel oil inventories fell most heavily in outright terms, erasing the large rise in stocks recorded the previous week. Fuel oil cargoes departed for the Mediterranean, the Port Said area, Singapore and west Africa. Some smaller cargoes arrived from France, Poland, Russia and the UK.

Reporter: Thomas Warner

Saudi Arabia Expected To Increase Oil Prices To Asia

Refiners in Asia expect the world’s largest oil exporter, Saudi Arabia, to raise the official selling prices for its crude oil going to Asia in January due to stronger winter demand, according to a Reuters survey.

Several major refiners in Asia, the top importing crude oil market, have recently increased spot purchases of crude oil to meet stronger demand as consumption is recovering from the lows seen earlier this year and as winter in the northern hemisphere approaches. 

According to the Reuters survey of six refiners in Asia, the buyers of crude expect Saudi Arabia to lift the price of its flagship Arab Light crude grade in January by $0.65 a barrel on average. Forecasts ranged from expected increases of between $0.50 and $0.85 per barrel. 

Saudi Arabia typically announces the official selling prices (OSPs) for its crude oil to all regions for the following month around the fifth of each month. 

The pricing of Saudi crude oil generally sets the trend for the pricing for Asia of other Gulf oil producers such as the United Arab Emirates (UAE), Kuwait, Iraq, and Iran. The pricing of Saudi Aramco affects as much as 12 million barrels per day (bpd) of Middle Eastern crude grades going to Asia.

Setting the prices for December earlier this month, Saudi Arabia reduced its OSP for its flagship Arab Light crude grade to its key market Asia as the Saudis appeared unconvinced that near-term demand had much room to grow. 

The cut in Saudi prices was in line with Asian refiners’ expectations, who had said in a Reuters survey that they expected either a small cut in prices or flat prices for December compared to November because of weakening refining margins and weakening Dubai benchmark prices. 

Over the past month, the Dubai and Oman benchmark prices have strengthened amid stronger demand for spot cargoes, according to data compiled by Reuters.

Is This The World’s Next Major Driver Of Oil Demand?

The energy industry has been plagued by the sharp and deep drop in oil demand for months, and the outlook does not look too good either—with or without vaccines. Traditionally, China has been the one bright spot on the global map as the large consumer that is always thirsty for crude. Now, there appears to be another driver of hope for oil demand: Brazil. The biggest country in South America has been one of the most severely affected by the coronavirus pandemic, but unlike other places that suffered mass infections, this has not harmed fuel consumption.

On the contrary, Bloomberg reports Brazil’s fuel consumption this year has been higher than it was in 2019 and is seen growing further next year driven by strong demand from the agricultural sector, which just finished planting a record amount of corn and soybeans, and from road traffic.

“The rebound in fuel demand was a big surprise,” Paula Jara, an analyst at energy consultancy Wood Mackenzie told Bloomberg in an interview. “When you come to think about it, Petrobras is arguably a unique case worldwide because they were able to raise fuel-making pretty quickly.”

In October, according to Bloomberg, Petrobras processed 1.85 million barrels of oil daily, up by a robust 17 percent on a year earlier, in response to the higher demand. The state major is now even facing a shortage of gasoline in the northeast that it needs to address amid a seasonal demand surge, Argus Media reported in late November.

The increase in demand in the final weeks of the year is coming on the back of eased movement restrictions amid the pandemic and, of course, the holiday season when many will travel to be with their families. Meanwhile, the chances for restrictions to be reimposed are slim, meaning there is little to challenge the surge in demand.

As for traffic patterns, Brazil is demonstrating what many theorized the pandemic would do to people’s driving habits: trips to offices and college campuses have declined as they have elsewhere, but driving for other purposes, such as grocery shopping, has increased. Also, longer journeys out of town have also increased in Brazil, according to the Bloomberg report, driving demand for fuel higher.

In this context—and with demand expected to continue strong—it is no wonder that Petrobras has shown no particular interest in joining the energy transition rush we see in Europe and, to a lesser extent, the United States.

“We are not facing an identity crisis. We are an oil company,” the chief strategy officer of the Brazilian state major told the Financial Times in a recent interview. “The demand will not disappear, and we don’t see other technology able to replace fossil fuels on a large scale [soon],” Rafael Chaves Santos added.

According to BP’s 2019 Energy Outlook, energy demand in Brazil is set for annual growth far exceeding the global total: 2.2 percent versus 1.2 percent in global annual growth. Although the supermajor forecast that the share of renewables will grow strongly in the country’s energy mix, it also noted that oil production will also continue to expand strongly, with Brazil accounting for close to a quarter of the total global increase in production by 2040.

The chief executive of Petrobras recently referred to the renewables rush among other oil companies as a fad, questioning the plausibility of Big Oil’s pledges to become net-zero companies by 2050.

“That’s like a fad, to make promises for 2050. It’s like a magical year,” Roberto Castello Blanco told Bloomberg, adding, “On this side of the Atlantic we have a different view of climate change.”

This does not mean that Petrobras has no emissions-cutting plans. It does, aiming at a 25-percent reduction by 2030. But at the same time, the company is not embarrassed about its core business and is planning an expansion of production while others curb theirs. Based on the demand outlook, the Brazilian major is not wrong.

ARA Oil Products Stocks Fall to Eight-Week Lows (week 44- 2020)

October 29, 2020 – Oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell over the past week to reach their lowest since 3 September, according to data from consultancy Insights Global.

Overall oil products stocks fell in the week to 28 October, with lower stocks of gasoline, diesel and fuel oil. Jet fuel stocks rose to fresh all, amid chronically low demand from the commercial aviation sector. The Airports Council International (ACI) suggested this week that almost 200 European airports face insolvency in the coming months because of the slump in passenger demand, with passenger traffic down in mid-October compared with the same period last year. Jet fuel cargoes arrived in the ARA area from Singapore and the UAE, both having travelled via the Cape of Good Hope in order to take greater advantage of the contango in Ice gasoil forward prices. Naphtha inventories also rose, but by less.

Gasoline inventories fell, weighed down by low inflows into the area. Tankers departed for the Caribbean, east Africa, the Mediterranean, Mexico and the US, and arrived from the UK and France. Delays in the blending component barge market around Amsterdam re-emerged for the first time since the beginning of October.

Gasoil inventories fell, and as with gasoline, inflows were low. A diesel cargo discharged in ARA, having served as floating storage on the North Sea, and tankers departed for Germany, France and the UK. Inventories inland remained high, limiting fresh demand for middle distillates from the northwest European hinterland. But heating oil demand is likely to intensify in the coming weeks.

Fuel oil stocks fell, having reached three-month highs a week earlier. Two Aframax tankers departed for the Mideast Gulf and at least one tanker left for the Mediterranean. Cargoes arrived from the Caribbean for the second consecutive week, following a poor cruise ship season which reduced bunker fuel demand.

Reporter: Thomas Warner

ARA oil product stocks reach 15-week highs (week 41 – 2020)

October 08, 2020 – Oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose over the past week to their highest since the week to 25 June, according to data from consultancy Insights Global.

Gasoline stocks rose to reach five-week highs, although shipments to west Africa increased following a new supply agreement between Nigeria’s state-owned NNPC, trading companies and refiners. Tanker bookings showed European gasoline was shipped on the route in each of the past two weeks, the highest in three months. A high level of gasoline blending activity prompted congestion and loading delays in the blending component market, particularly around Amsterdam.

Naphtha stocks rose to reach eight week highs. Demand for the product remains firm in Europe, supporting prices and in turn drawing more cargoes into the area.

Middle distillate markets continued to labour under high inventory levels, with gasoil and jet fuel stocks reaching three and eight week highs, respectively. Gasoil stocks rose on the week, despite the highest weekly volume of gasoil heading up the river Rhine on barges since mid-July. Higher demand was prompted in part by an increase in Rhine water levels. A further 1.1mn t of gasoil remained in floating storage on the North Sea, according to oil analytics firm Vortexa data.

Jet fuel stocks rose, approaching record highs. Seasonally low demand for jet fuel and the reimposition of some Covid-19 restrictions in Europe continued to weigh heavily on demand. A single tanker arrived from the UAE, having travelled via the Cape of Good Hope.

Reporter: Thomas Warner

ARA Oil Product Stocks Tick Down (week 40 – 2020)

October 1, 2020 – Oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub edged down by less than 1pc over the past week, according to data from consultancy Insights Global.

Middle distillate markets continued to labour under notably high inventory levels. Gasoil stocks dropped on the week, but remained close to 13-month highs. And the volume of gasoil departing the ARA area for inland destinations along the river Rhine fell to its lowest level since Insights Global began collecting the relevant data in November 2017, weighed down by low water levels and high inventories inland. Gasoil tankers arrived in the ARA area from the North Sea, where there was around 1.1mn t held in floating storage as recently as 23 September. Tankers departed for Argentina, west Africa and the UK.

Jet fuel stocks rose, staying close to all time record highs. The end of the peak summer holiday season and the reimposition of some Covid-19 restrictions in Europe continued to weigh heavily on demand. A single tanker arrived from the UAE, while two tankers departed for the UK.

Gasoline stocks rose, with the volume of in and outflows easing on the week. Gasoline cargoes arrived in ARA from the Baltics, Finland, France and the UK and departed for the US, the Mediterranean and west Africa. Outflows to the US fell for a second consecutive week, while outflows to west Africa were steady. There was some congestion in the barge market, particularly around the port of Amsterdam. Gasoline inventories are around a third higher than at the same time last year following two quarters of depressed demand caused by pandemic travel restrictions.

Overall naphtha stocks fell from the previous week, with cargoes arriving from Algeria, Norway and Portugal. The volume of naphtha heading up the Rhine was broadly stable on the week, with steady demand coming from both the petrochemical and gasoline blending sectors.

Fuel oil stocks fell after reaching nine-week highs the previous week. Cargoes departed for the Mediterranean, and arrived from the Caribbean, Denmark, France, Germany and the UK.

Reporter: Thomas Warner

ARA Oil Product Stocks Rise on Gasoil Inflows

September 10, 2020 – Oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose this week, rebounding from the five-month lows recorded a week earlier.

Overall oil product inventories had been falling consistently since reaching 17-year highs in mid-June, but a sharp rise during the week to yesterday bucked the long-term trend. Stocks rose sharply following the onset of the Covid-19 pandemic as demand for fuels fell heavily, but inventories gradually fell throughout the summer as demand started to recover. The reimposition of lockdown measures in some key markets east of Suez, and a rise in Russian exports, have since attracted a wave of middle distillates into northwest Europe.

Gasoil stocks rose on the week as a result, the highest weekly percentage rise since Argus began recording the relevant data in January 2011. Burgeoning supply brought diesel refining margins to their lowest since 2002 on 9 September. The rise in land-based stocks was supported by the discharging in the ARA area of tankers that have been used as floating storage on the North Sea. Tankers also arrived from Russia and the US. Flows of gasoil from the ARA area up the river Rhine rose to eight-week highs, but remained down on the year.

Fuel oil stocks also rose sharply on the week. Tankers departed for the Mediterranean and west Africa but with relatively small cargoes on board, while tankers arrived in the area from the Baltics, France, Poland and Russia. Consumption of marine fuels is under downward pressure from the loss of custom from cruise ships this year caused by the Covid-19 pandemic. Saras chief executive Dario Scaffardi said at the company’s second-quarter results that cruise ships account for around 7-9pc of the company’s marine fuel sales.

Jet fuel stocks rose, remaining close to the all-time record high levels recorded during August. The end of peak summer demand season and the reimposition of some Covid-19 restrictions within Europe weighed heavily on demand. IAG — owner of British Airways, Aer Lingus and Iberia — is the latest airline group to adjust its plans to absorb the impact of current travel restrictions and quarantine measures on booking activity. It said today that it now expects capacity in the third quarter to be below 2019 levels, compared with previous guidance of a decline. A tanker arrived from the UAE, while jet fuel cargoes left the area for the UK and Ireland.

Stocks of gasoline and naphtha both fell, reflecting a recent increase in gasoline outflows from the region. Gasoline stocks fell, with tankers departing for the US, west Africa, Canada, Mexico and the Mediterranean. The volume of gasoline moving around the ARA area on barges also rose on the week. Cargoes arrived from Finland, France, Norway and the UK. Butane prices rose as demand from gasoline blenders increased ahead of the switch to winter grade gasoline, which has lower evaporability specifications than summer grade and can therefore contain a higher proportion of lighter oil products.

Flows of LPG up the river Rhine rose on the week as a result, as did flows of naphtha, which is a key blending component year-round. Overall naphtha stocks fell, partially as a result of the rise in Rhine flows. The relatively low volume of naphtha arriving on seagoing tankers also contributed to the stock draw. Tankers arrived from Algeria, Russia and the UK but in below average quantities.

Reporter: Thomas Warner

ARA Oil Product Stocks Hit Fresh Four-Month Lows

September 03, 2020 -Oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell this week, the lowest total recorded since 30 April.

Overall oil product inventories continued to fall back from the 17-year highs in mid-June. Stocks rose sharply following the onset of the Covid-19 pandemic as demand particularly for fuels fell heavily, but have since fallen gradually to the four-month lows recorded during the week to yesterday.

Stocks of gasoil, fuel oil and naphtha all fell week on week, while gasoline inventories rose and jet fuel inventories jumped. The Suezmax Dong a Thetis loaded a jet fuel cargo in Rotterdam the previous week, which brought jet inventories to their lowest since mid-May. But the arrival of tankers from South Korea, India and Saudi Arabia brought stocks straight back up to a level close to the three-month average.

Gasoline stocks rose for a second consecutive week, supported by the arrival into the ARA of cargoes that had been held in floating storage on the North Sea. Cargoes also arrived from France and the UK. Outflows to key arbitrage destinations the US and west Africa rose on the week, and tankers also departed for Canada and Mexico.

Stocks of all other products fell. Gasoil inventories fell back from five-week highs, despite flows of diesel from the ARA area up the river Rhine falling again to reach their lowest since at least November 2017, when Insights Global began tracking the relevant data. Low Rhine water levels had inhibited barge journeys inland in recent weeks. But a temporary rise in water levels did little to stimulate inland flows, with middle distillates in the European hinterland still high. Gasoil tankers arrived in the ARA region from Russia and departed for the UK.

Flows of naphtha up the Rhine fell sharply on the week, owing to a fall in demand from petrochemical end-users. The main buyers are well covered in the short term, reducing the incentive for them to bring more naphtha inland. And demand from around the area for naphtha as a gasoline blending component remains low as a result of the northwest European surplus of finished grade gasoline. Naphtha cargoes arrived from Algeria and Russia, while none departed.

Fuel oil stocks fell to reach their lowest since the week to 5 March. Demand for bunker fuels has been generally low since the beginning of the pandemic, and there was little sign of a sudden increase in demand over the past week. Outflows to west Africa rose on the week, and tankers arrived from Denmark, Poland, the UK and the Caribbean. Fuel oil demand in the Caribbean is probably suffering from the impact of Covid-19 on the cruise industry.

Reporter: Thomas Warner

ARA Oil Product Stocks Hit Four-Month Lows

August 27, 2020 – Oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell this week, with stocks of all surveyed products falling except gasoil.

The total is the lowest recorded since the week to 30 April. Sudden heavy falls in oil product demand during the onset of the Covid-19 pandemic brought crude and product markets into a contango that lifted inventories to their highest level in at least 17 years during mid-June. Inventories have since fallen gradually to the four-month lows recorded during the week to yesterday.

Fuel oil and jet fuel each fell heavily. Jet stocks fell to reach their lowest since mid-May. A rare westbound arbitrage opened last week, probably a result of low northwest European jet prices. The largest single factor in this week’s stock draw was the loading of the Suezmax Dong a Thetis in Rotterdam. The tanker is awaiting orders in the North Sea. Cargoes also left the ARA region for the UK. The only incoming cargo came from the Ardmore Enterprise, which had itself been waiting in the North Sea for orders prior to offloading a part-cargo in Rotterdam.

Fuel oil stocks fell to reach their lowest since the week to 5 March. Demand for bunker fuels has been generally low since the beginning of the pandemic, and there was little sign of a sudden increase in demand over the past week. The heavy fall in inventories was more the result of the departure of a Suezmax for Singapore, as well as the departure of other tankers for the Mediterranean and west Africa. No Suezmax tankers arrived either, with smaller tankers arriving from Poland and Russia.

Gasoline stocks fell for the second consecutive week. Inventories had been at record highs, but the opening of the arbitrage route to the US boosted exports over the week. Gasoline outflows to the US are likely to continue in the short term owing to the temporary production cuts prompted by the anticipation of Hurricane Laura. Tankers also departed the ARA area for west Africa, Mexico and Canada, and arrived from the Baltics, France and the UK.

The amount of gasoline being produced in northwest Europe appeared to rise in response to anticipated firming of US demand, which in turned helped weigh on inventories of naphtha — a key component in gasoline blending. Naphtha stocks fell, weighed down additionally by fading demand from inland petrochemical end-users. Tankers arrived in the ARA area from Norway and the UK, while an LR1 departed for Brazil.

Gasoil stocks bucked the trend, rising to reach five-week highs. Diesel demand up the Rhine has been capped because of full tanks, while heating oil consumption remains subdued by warm weather. Flows from the ARA area into Germany consequently reached their lowest since at least November 2017, when Insights Global began tracking the relevant data. Gasoil arrived in the ARA region from Russia and the US, and departed for Argentina and the Mediterranean.

Reporter: Thomas Warner

ARA Oil Product Stocks Flat

August 20, 2020 – Oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub this week, as light distillates draws were outweighed by builds in gasoil and fuel oil.

Gasoline stocks fell back from last week’s record high in the week to yesterday, according to consultancy Insights Global. The total is still up from the same time a year ago, but has edged down on the period because of slightly firmer export demand.

Gasoline tankers arrived from France, Italy, Spain and the UK, and departed for Canada, the Mediterranean, the US and west Africa, as well as the North Sea for orders. European gasoline producers and blenders could be in the unusual position of having to roll summer-grade stocks over to next year, unable to drain tanks before the transition to winter grades at the end of next month.

A rise in blending demand and lower imports saw naphtha inventories fall, but remain around twice the level of a year ago. Naphtha cargoes arrived in the ARA region from Russia and the UK, while nothing left the region during the period.

Jet stocks declined on the week as a rare westbound arbitrage appears to have opened, probably a result of low northwest European jet prices. Cargoes left the ARA region for the UK as well as the US, and arrived from the Mideast Gulf.

Gasoil stocks were higher, as lacklustre demand was offset by lower imports. Diesel demand up the Rhine has been capped because of full tanks, while heating oil consumption remains subdued by warm weather. Gasoil arrived in the ARA region from Canada, Russia, the UAE and US, and departed for Argentina, the Mediterranean and UK.

Fuel oil recorded by far the biggest build on the week. A shortage of high-sulphur fuel oil production has drawn in cargoes from outside the region, including an Aframax-sized vessel from Russia. Additional cargoes arrived from the Caribbean, Finland, Norway and Poland. Fuel oil left the region for the Mediterranean and west Africa.

Trading and refining firm Gunvor has kept off line its Antwerp and Europoort plants, which are normally among the largest suppliers of high-sulphur residual products in northwest Europe.

Reporter: George King Cassell