ARA gasoil stocks increased to a record high of 6.416mn MT the week ending September 9 after a 175,000 MT build. This marked the highest stock level since Genscape began monitoring the area in August 2012. Storage levels are likely to continue to build in ARA with a net increase of 639,805 MT of gasoil predicted to enter the area in the next few weeks, according to Genscape shipping data.
The rise in stocks the week of September 9 was the second consecutive weekly increase for ARA gasoil stocks, with storage levels up 337,000 MT between August 26 and September 9. The record high the week of September 9 was 93,000 MT higher than the previous record high of 6.323mn MT reached week ending July 15.
During the release time of Genscape’s weekly gasoil inventory report at 8 a.m. (GMT) on September 14, the ICE Low Sulphur Gasoil Futures contract price traded near $417.75/MT. Following the data release, the ICE Low Sulphur Gasoil Futures contract declined $7.75/MT in six hours to near $410/MT by 2 p.m. (GMT).
On September 9, the ICE Low Sulphur Gasoil 12-month spread was $46.50/MT, the widest since August 11 when the spread was $63/MT. Since the week ending August 26, the spread widened $8.25/MT, and gasoil storage levels increased 337,000 MT. Between August 22 and September 15, the ICE Brent Crude Oil front month contract did not close above the $50/bbl-mark. On September 1, the price closed at a low of $45.45/bbl.
Genscape monitored a similar stocking pattern in previous years. In 2015, stocks built 2.573mn MT to 5.976mn MT between March 13, 2015 and September 4, 2015, the highest level recorded at that time. Due to the recent oversupply of oil and relatively mild winter this year, gasoil supplies did not fall as significantly as in previous years, and therefore did not have as strong of a building pattern. Between March 11 and September 9, 2016, gasoil stocks increased 419,000 MT, leaving storage levels on September 9, 415,000 MT higher than the same week one year prior.
The recent continuous build of gasoil stocks can likely be attributed to low demand during the summer months as terminals stock up for the upcoming colder months. In addition, a net increase of 102,420 MT of gasoil entered the ARA area the week of September 9, likely contributing to the record high. According to Genscape shipping data, the majority of the gasoil entered through Rotterdam, with 205,160 MT of gasoil discharged in the area.
On September 9, the ARA terminals utilized 71 percent of the gasoil capacity, up one percent from one-week prior and just below the record high capacity utilization of 76 percent reached on October 16, 2015. Out of the 33 locations holding gasoil in ARA, 20 had capacity utilization rates above 70 percent the week of September 9.
Out of the 746 tanks monitored in ARA holding gasoil, only 76 out of 669 operational tanks, or 11 percent, utilized less than 15 percent of the tank’s capacity. Of those operational tanks, 413, or 62 percent, utilized over 80 percent of the tank’s capacity. In comparison to the previous record high on July 15, 419 out of 630 operational tanks, or 67 percent, utilized more than 80 percent of the tank’s capacity.
Following the most recent International Energy Agency data release on September 13, Genscape weekly gasoil inventory data was tracking at a 98 percent correlation.
Receive accurate and timely fundamental data to gain insight into the most critical component of the European oil supply with Genscape’s ARA Refined Product and Crude Storage Reports. These reports measure tank-by-tank physical inventories for gasoline and naphtha, jet fuel, crude oil, and gasoil. To learn more, or request a free trail of Genscape’s ARA Refined Product and Crude Storage Reports, please click here.