Industry Trend Analysis - Fuel Stocks To Rebound On Seasonal Stockpiling, China - NOV 2017

BMI View: Although a cute fuel shortages in the US Gulf C oast and strong demand growth in the regional EMs triggered aggressive fuel stock drawdowns in Singapore over the past few weeks, we expect stock levels to rebound over the coming months, as refineries stock up on supply ahead of the winter months and ex ports ramp-up from China.

Combined refined fuel stockpiles in Singapore fell for the fourth consecutive week in the week ending September 13 2017 amid increased shipments to the US Gulf Coast in the aftermath of Hurricane Harvey and strong demand in the region's emerging markets. Combined stocks fell 12.9% from a multi-month high in March, with light distillate stocks seeing the biggest decline of 20.8% over this period. Stock levels typically expand in Q3 and early-Q4 due to a seasonal drop-off in demand. However, fuel stocks have decreased aggressively in recent weeks as large volumes of gasoline and diesel shipments to Asia were diverted to the US to ease a sharp supply deficit in the US Gulf Coast following Hurricane Harvey.

Despite gradual resumption of refinery operations, still about 11.0% of US refineries remain shut. Oil products tanker flow from Asia to North America rose 8% y-o-y in August in deadweight tonnage terms. September's volumes will nearly be triple that of the previous year's levels with 28 tankers (eight from Singapore) already booked to delivery 1.3mn tonnes of gasoline, diesel and lower-sulphur fuels to the US.

Fuel Stocks Fall Across The Board
Singapore - Refined Fuel Stocks, 000 bbls
Source: IE Singapore, BMI

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