Singapore’s middle distillates stockpiles have surged by 8% week on week, reaching a new high since September 2021, as net exports of both diesel/gasoil and jet fuel/kerosene have slipped by 98% and 26%, respectively, according to Reuters.
According to Enterprise Singapore data, Inventories of gasoil/diesel and jet fuel/kerosene at the key oil storage hub were at 10.787 million barrels, compared to 9.99 million barrels a week ago.
The decrease in net exports of diesel/gasoil was attributed to a more than 38% increase in total imports week-on-week, with import arrivals from South Korea and China being the main driver. This is in line with earlier trader expectations that these cargoes would arrive in Singapore in the near future, given the volatile east-west arbitrage window and better seller profitability in Asia.
Imports from South Korea have reached their highest level in 2024 so far.
Kpler and LSEG shiptracking data also showed that March-loading cargoes are expected to increase for a third consecutive month.
With the South Korean arbitrage more favorable than those from the Middle East into Singapore, aided by their reduced FOB (free on board) premiums, March Singapore diesel spreads have weakened considerably and are close to a contango structure, as Sparta Commodities analyst James Noel-Beswick said.
A contango price structure, where prompt prices are higher than forward month prices, typically encourages traders to hold onto their stockpiles as there is increased profitability in selling forward cargoes instead.
Meanwhile, diesel/gasoil cargoes from the Middle East, mainly the United Arab Emirates and India, were also prevalent in overall imports for the week. However, total exports of diesel/gasoil fell by around 4% as volumes to regional destinations slowed down, especially to Indonesia and Australia. Exports to Vietnam have resurfaced due to recent demand in the country.
On the jet fuel/kerosene front, exports from China were also evident, contributing to the overall decrease in net exports. There are still signs of China-origin cargoes continuing well into April, as some China majors have already started spot sales this week.
