Robust Gasoil Net Exports Drive Singapore's Middle Distillates Stocks to a Year-Low

Singapore's middle distillates stocks experienced a notable decline for the third consecutive week, marking a significant drop to a more-than-one-year low of under 7 million barrels. This downturn can be attributed to the robust net exports of gasoil/diesel, resulting in a reduction in inventories of gasoil/diesel and jet fuel/kerosene at Singapore's key oil storage hub. The data for the week through January 17 revealed a 3% week-on-week decrease, bringing the total stocks to 6.903 million barrels.

The surge in net exports of gasoil/diesel played a pivotal role in this decline, witnessing an impressive increase of almost 40% compared to the previous week. The overall total exports also demonstrated a substantial uptick, registering a nearly 7% rise. The majority of these exported volumes found their way to regional destinations, with Indonesia leading the pack. This trend aligns with expectations, as fuel buyers in Indonesia had heightened their purchases since the initiation of the refinery maintenance season in late 2023.

An interesting development was the emergence of exports to Thailand, albeit at a lower volume. This marked a departure from the usual pattern and was prompted by an unexpected crude unit shutdown in Thailand that commenced during the week under review. If the challenges persist beyond the current two-week state, there may be further reshuffling of cargoes by one or two traders back to Thailand. Despite this, volumes to other destinations such as Australia and Malaysia continued to remain prevalent.

Simultaneously, there was a noteworthy decline in imports, witnessing a significant 26% week-on-week decrease. However, China-origin cargoes made a reappearance in Singapore for the first time in almost a month. This resurgence was attributed to the availability of export quotas since the beginning of the new year. It is anticipated that more than 135,000 metric tons of China-origin diesel/gasoil will arrive in Singapore in January, marking a substantial contribution to the local middle distillates market.

The dynamics of Singapore's middle distillates market underscore the intricate interplay of factors such as regional demand, unexpected disruptions, and global trade patterns. The resilience of the market, even amidst challenges such as refinery maintenance and unexpected shutdowns, is evident in the continued prominence of key destinations like Indonesia and the emergence of new patterns, such as exports to Thailand. The decline in imports, coupled with the resurgence of China-origin cargoes, adds another layer of complexity to the market dynamics, reflecting the adaptability and responsiveness of the industry to evolving circumstances.

As the middle distillates landscape in Singapore evolves, industry observers will be keenly watching how these trends unfold in the coming weeks and how various market players respond to the changing dynamics. The delicate balance between supply and demand, coupled with geopolitical and operational considerations, will continue to shape the trajectory of Singapore's middle distillates market in the near future.