14-02-2013 Traders store diesel as a contango play

LONDON, Feb 14 (Reuters) – Gasoil stocks independently held at the Amsterdam-Rotterdam-Antwerp hub jumped by 10 percent week-on-week, data from Dutch oil analyst Pieter Kulsen showed on Thursday.

Gasoil stocks, which include heating oil and diesel, leapt to 2.538 million tonnes, up from 2.308 million tonnes last week. Kulsen suggested traders were storing diesel as a contango play, with prompt diesel barge swaps currently trading about $9 lower than the March swaps. This means diesel can be stored and sold at a profit in the future.

“We also saw a diesel cargo arrive from the United States,” said Kulsen. Inventories were also boosted by incoming cargoes from India, Russia and Norway. Gasoil cargoes departed to the Mediterranean for orders, with Algeria and Egypt both needing to fill buy tenders this month.

14/02/13 07/02/13 16/02/12
GASOLINE 740 843 677
NAPHTHA 113 236 55
GAS OIL 2,538 2,308 2,675
FUEL OIL 943 725
JET FUEL 360 370

All figures in thousands of tonnes

Gasoline stocks slipped to 740,000 tonnes from 843,000 tonnes, which Kulsen attributed to cargo movements. At least two cargoes departed for the United States, where gasoline prices have risen following Hess’s <HES.N> January announcement that it would close its Port Reading, New Jersey refinery. This opened up the trading arbitrage.

Cargoes also departed for China, Nigeria and other West African countries. Gasoline arrived at the ARA hub from France, Norway, Russia, Sweden, Turkey and Britain. Naphtha inventories slumped to 113,000 tonnes from 236,000 tonnes as gasoline blenders continued to use naphtha to meet West African gasoline demand. One cargo of naphtha departed to northwest Europe, while naphtha arrived at the ARA hub from Russia and Spain.

Fuel oil stocks climbed to 943,000 tonnes from 725,000 tonnes, boosted by arrivals from Belarus, Brazil, Estonia, Russia and Britain. One VLCC departed for Singapore, with two others also loading for Singapore, one partly filled with fuel oil, the other a full cargo.

Jet fuel inventories were steady at 360,000 tonnes, with imports from India offset by draws by the aviation sector and barges. “Jet fuel traders are still reluctant to store because of the backwardation in ICE gasoil futures,” said Kulsen. “We are also still seeing some jet fuel moving into diesel as a blending stock, and airlines are still only buying what they need.”

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