OIL & GAS

Major oil trading firms stow diesel, jet fuel on supertankers as demand rebound eyed

Major oil trading companies are stowing diesel and jet fuel on newly built supertankers in Asia and Africa in anticipation of COVID-19 vaccinations driving prices higher in the months ahead despite the activity being less lucrative now than last year.

Trafigura, Glencore and Vitol are holding about 1.5 million tonnes of the industrial and aviation fuel on at least seven Very Large Crude Carriers (VLCCs) off Singapore, Malaysia, Sri Lanka and Africa, according to shipping sources and data from analytics firms Vortexa, Kpler and Refinitiv.

These storages are helping Asia hold back excess supplies and prevent added pressure on prices as China ramps up diesel exports from refining overcapacity while renewed lockdowns in India to curb the spread of COVID-19 threatens to cool fuel demand at the world’s third largest oil consumer.

“Given how narrow the current East-West arbitrage window is, I would expect traders to opportunistically load gasoil on newbuild VLCCs to head to the West, taking advantage of lower freight costs on a per barrel basis,” said Serena Huang, Asia lead analyst at Vortexa.

Source
ET news
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