Singapore light distillate fuel stocks hit record high
Light distillate fuel stocks at Asia’s refining hub in Singapore have climbed to a record on surging supply just as fears emerge of an economic downturn heading into 2019, but holiday demand and refinery maintenance could lend some relief.
Light distillate stocks in Singapore, which include the key transportation fuel gasoline and important petrochemical feedstock naphtha, rose by 1.47 million barrels in the week to Jan. 2, to a record 16.1 million barrels, according to data from Enterprise Singapore released on Friday.
The record comes on soaring supply from refineries across Asia, including China where exports have surged amid a broad expansion of the country’s refining capacity.
A slow-down in demand growth in key consumers such as China and India has also contributed to growing gasoline supplies, said Matthew Chew, principal oil analyst at IHS Markit in Singapore.
Weighed down by excess supply and sluggish demand, gasoline producers began losing money from gasoline after Asia’s benchmark gasoline margin GL92-SIN-CRK in December turned negative. The benchmark has since recouped some losses.
“We expect the weakness to persist in January but there could be some relief in February with higher seasonal demand during Lunar New Year (Feb. 5-6) easing some of the oversupply,” said Chew.
“Planned refinery maintenance season thereafter could also help.”
However, traders said a slowdown in economic growth and, by extension also in fuel and petrochemical consumption, could keep inventories elevated.
“If factory utilisation rates fall, then purchases of raw materials like petrochemical feedstocks will also weaken,” Singapore-based shipping brokerage Eastport said on Friday.
Data for December from the Institute for Supply Management (ISM) on Thursday showed the broadest U.S. slowdown in growth for more than a decade, as the trade conflict with China, falling equity prices and increasing uncertainty started to take a toll on the world’s biggest economy.
Leading economies in Asia and Europe have already reported a fall in manufacturing activity.
Source: Reuters (Reporting by Roslan Khasawneh and Henning Gloystein Writing by Henning Gloystein Editing by Kenneth Maxwell and Richard Pullin)