ARA diesel, gasoil stocks fall 6.8% on week to 2.091 mil mt: Insights Global
17th September 2021 10:20 GMT

 

Stocks of diesel and gasoil in the Amsterdam-Rotterdam-Antwerp hub fell by 153,000 mt, or 6.8%, on the week to 2.091 million mt as of Sept. 16, leaving stocks 29.1% lower than at the same point in 2020, according to data from Insights Global.

 

Sources said that diesel demand was "average" for the time of year, but unlikely to see a significant jump as holiday season comes to an end in Europe.

“Flat prices are still high and demand is just not there,” a market source said.

However, the market’s backwardation structure was encouraging suppliers to minimize their stock levels of 10 ppm material.

The October/November backwardation in the ICE LSGO futures market was assessed at $1.75/mt Sept. 16, stable day-on-day, while the November/December backwardation widened by 50 cents/mt to $4.50/mt.

Meanwhile, a relatively narrow spread between 10 ppm and 50 ppm grades has raised the attractiveness of acquiring more readily available 10 ppm volumes to use for heating oil.

Some German consumers were choosing to purchase 10 ppm to use for heating oil, and subsequently adding red dye in-house, sources said. Red dye is required for heating oil in Germany.

10 ppm ULSD barges were assessed at a $1.25/mt discount to the ICE LSGO futures Sept. 16, and at a 75 cents/mt discount to the 50 ppm FOB ARA barge market, unchanged on the previous week

In the gasoil market, overall heating oil demand remains subdued, with little expectation of a rebound in demand until October.

“We are not seeing a pick-up in demand on heating oil, and the flat price is not helping,” the market source said. “Hopefully in October it will pick up, but September so far doesn’t look good.”

Like the diesel market, a steeply backwardated structure is also disincentivizing restocking, with suppliers preferring to minimize their reserves.

One German source said that their stock levels were at 50% capacity owing to the backwardation. By comparison, stocks were near capacity at this point last year due to a contango structure prevailing at the time.

The 50 ppm FOB ARA barge market was assessed at a $2/mt discount to the ICE LSGO futures Sept. 16, widening by $1/mt week-on-week.


Bunkerworld .,
17th September 2021 10:20 GMT