ARA naphtha stocks hit near record highs, gasoline up on fewer exports
Naphtha inventories in the Amsterdam-Rotterdam-Antwerp hub rose 10% to 366,000 mt in the week ended Thursday, rising for the fourth consecutive week and nearing record levels on the back of covered end-user demand and weaker blending interest.
The last time stocks were measured higher was March 29 at 367,000 mt, a record high, according to data from PJK International.
Naphtha stocks were also up 3.1% on the year, reflecting a weaker-than-usual market at this time of the year.
According to sources, the stock build is due to a shrinking gasoline blending pool and covered petrochemical demand, which have removed the two major sources of demand from the market.
A smaller-than-usual volume of cargoes moving to Asia in June has also added to the demand-supply imbalance, while the return of refinery run rates after a heavy turnaround maintenance program in Europe is also expected to increase the availability of product in the region.
Expectations of added supply of light virgin naphtha grades from the US Gulf Coast in the second half of June will add a further bearish dimension to the market as demand struggles to keep pace with supply.
ARA gasoline inventories rose 45,000 mt to 1,052,000 mt in the week ending June 7 on weaker export demand. ARA stocks are up more than 18% year on year despite markets heading into a period of usually strong demand caused by the summer driving season. However, strong exports to the US and West Africa, both major sources of demand, earlier in the year have left inventories well stocked.
“There is not much blending going on in Europe,” a source said.
Increasingly bearish signals indicate previously strong exports to the US Atlantic Coast might see a significant slowdown in the months to come, sources say.
Gasoline stocks on the US East Coast (PADD I) have rose 2.22 million barrels to 66.94 million barrels in the week ending June 1, the highest level recorded this year, according to the latest data from the US Energy Information Administration.
Furthermore, the EIA pegged imports of gasoline blending components continuing to trend lower at 576,000 b/d.
Gasoline flows from Northwest Europe scheduled to arrive in the US and on the east coast of Canada up until the fourth week of June amount to around 957,000 mt, data from S&P Global Platts trade flow software cFlow showed.
Demand out of West Africa remains weak, mainly due to the supply overhang offshore Nigeria, according to sources. Supplies offshore Lagos have come down to about 725,000 mt, but there are also “some barrels” offshore Lome, a source said.
The source reiterated that there is no need for resupply to the region right now.
“Europe is weak and cheap but not enough to move anywhere”, another source said on the state of the market.