Singapore’s middle distillates stocks surge 1 mln bbl on slow gasoil outflow

Singapore’s middle distillates inventories surged by almost 1 million barrels, as persistently lower gasoil outflows for a second straight week offset an increment in jet fuel/kerosene net exports, official data showed on Thursday.

Stockpiles of gasoil and jet fuel/kerosene held in key oil storage hub Singapore were at 9.405 million barrels in the week ended Nov. 1, compared with 8.504 million barrels last week, the data from Enterprise Singapore showed.

Gasoil net exports declined by 27% from the previous week, with total exports falling by a faster pace then total import volumes.

Imports from China and South Korea remained prevalent on lucrative seller margins. Also, the east-west arbitrage – measured by the exchange of futures for swaps differential between prompt month gasoil swaps and ICE gasoil futures – was closed in the past few weeks.

“South Korea has reclaimed its usual position as the most cost-effective supplier to Singapore, particularly in the very immediate term,” said Sparta Commodities analyst James Noel-Beswick.

This is mainly attributed to the falling cash premiums for South Korea-origin barrels in the past two weeks and the decline in sellers’ freight costs for medium-range ship vessels on the South Korea to Singapore route, he added.

Separately, more China-origin barrels – 100,000 metric tons or more – are expected to reach Singapore shores in the next two weeks, LSEG shiptracking data showed.

China’s oil majors are still finding it lucrative to engage in export discussions, given the wide price differential between import parity of yuan-denominated wholesale prices and FOB Singapore prices, a China-based trader said.

For gasoil exports, outflows remained mostly to regional destinations such as Indonesia and Malaysia, as maintenance plans would continue until November.

Exports to Vietnam also resumed after almost two months, as some importers there were seeking for prompt delivery cargoes recently, after earlier demand for contractual cargoes.

Separately, jet fuel/kerosene exports surged by more than three times, slowing the pace of inventory build up for the week.

Likewise the gasoil export situation, jet fuel/kerosene outflows were largely to regional destinations such as Australia, Malaysia and Vietnam.
Source: Reuters (Reporting by Trixie Yap, graphics by Ashley Fang; Editing by Rashmi Aich)