Singapore middle distillate stocks hit 22-week high on backlog of regional inflows

Singapore — Asia's main trading hub of Singapore has flipped back to being a net exporter of middle distillates for the first time in four weeks, but a build-up of inflows from Northeast Asia in previous weeks due to the coronavirus outbreak has pushed stockpiles to a 22-week high, latest data showed.

Combined gasoil, jet fuel and kerosene stocks stood at 11.9 million barrels in the week ended March 4, up 4.34% from the week before, Enterprise Singapore data released late Thursday showed. Stocks were last higher in the week ended October 2 last year at 12.39 million barrels, historical data from the government agency showed.

Singapore's gasoil outflows totaled 347,618 mt in the week, outpacing inflows of 273,616 mt, the data showed.

Gasoil exports were up 33.7% on the week, with most of the volume moving to Malaysia, Bangladesh and Indonesia at 109,666 mt, 57,361 mt and 48,542 mt, respectively.

Inflow fell 21.1% over the same period. While high volumes were still seen arriving in the week from China and South Korea -- two of the countries worst-hit by the coronavirus -- Taiwan was the largest supplier at 127,105 mt. China and South Korea followed with 96,452 mt and 40,615 mt.

S&P Global Platts reported earlier that South Korea's gasoil demand fell 23.5% year on year to 11.78 million barrels in January, dragged down by a domestic economic slump and the coronavirus, latest Korea National Oil Corp data showed.

The jump in Singapore's inventories indicates that despite exports outpacing imports in the week to March 4, higher inflows in previous weeks have not been able to drain out of Singapore due to anemic regional demand and largely unworkable arbitrage economics, market sources said. The surge in gasoil exports was off a low base the week before, sources noted.

JET FUEL EXPORTS FALL

Singapore's co-distillate jet fuel outflows fell by almost half to 82,678 mt in the week to March 4 from 163,927 mt the week before, the data showed. Market participants attributed the fall to a narrowing Exchange Futures for Swaps and rising freight rates denting East-West arbitrage economics and hampering cross-regional flows. Australia was the main destination in the week at 23,342 mt, followed by Togo at 12,568 mt and Reunion at 12,537 mt.

Jet fuel inflows were down 40% on the week at 51,569 mt, with China supplying 41,222 mt of the total, the data showed.

The front-month EFS averaged minus $8.52/mt over February 27-March 4, narrowing from $9.92/mt over February 20-26, Platts data showed.

The downtrend could continue in coming weeks amid depleting requirements from the aviation sector due to flight cancellations, market sources said.