Singapore inventories of jet, diesel hit 7-week high, light ends down 5%

Quantum Commodity Intelligence – Stocks of jet fuel and diesel in the storage hub of Singapore reached a seven-week high on Wednesday, as supply continued to outweigh sluggish demand amid travel curbs in southeast Asia.

Inventories of middle distillates rose 690,000 barrels over the course of the week, totalling 13.78 million barrels, according to data published by Enterprise Singapore.

The figure is a 5% increase on the week, although stocks are broadly at the average level so far this year and only 10% under the pandemic-hit year of 2020.

Spot jet cracks have fallen by around $0.60/b over the course of the week to $1.88/b FOB Singapore, as rising Covid-19 infections in Malaysia, Indonesia and Australia hit sentiment.

Air travel in southeast Asia remains 65% under pre-pandemic levels, according to aviation analysts OAG.

Meanwhile, cracks for 10ppm diesel also fell, but only by around $0.40/b to $4.68/b FOB Singapore, according to Quantum data.

While declining margins for distillates can also be attributed to higher crude, the weaker picture for nearby jet fuel demand in Asia was one that was evident further down the curve, with July and August paper cracks falling by about $1/b to $2.61/b and $3.66/b, respectively.

Aviation analysts OAG said global airlines added another 3.1 million seats last week compared to the week before, although almost 8 million have been removed for July and a further 7 million for October.

"Many of these changes are airlines just aligning their schedules to current plans but importantly it is an indication of the confidence carriers have in the recovery and the regulator's reluctance to allow international travel to recover," OAG said.

Elsewhere, stocks of fuel oil rose 2% on the week to 23.95 million barrels as rising imports replenished inventories.

Fuel oil stocks are now at the average level so far this year and of that of 2020.

Stocks of light ends, such as gasoline, LPG and naphtha, fell 5% to a three week low. Stocks now stand at 12.75 million barrels.

That figure is 10% down on the year so far and more 11% down on the 2020 average.