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Global oil storage fills to the brim despite leap in costs

March 26/2020

MOSCOW (MRC) -- From Canada and the Caribbean to the Baltic and Singapore, oil tanks around the world are filling fast, despite a 50%-100% jump in lease costs, as oil companies and traders scramble to park unwanted crude and refined products, said Hydrocarbonprocessing.

Millions of barrels are struggling to find buyers among industrial users and refiners, which have cut operations as the impact of the coronavirus has destroyed demand and a Saudi-Russia market share battle has led to a flood of supply.

Fuel storage rates doubled this month in some onshore European and U.S. hubs as traders rushed to secure tanks in the hope of selling their products at a higher price when the coronavirus outbreak eases and demand recovers. Europes Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub saw the cost of storing diesel and jet kerosene rise by between 50% and 100%, traders and industry watchers said.

"Storage prices for gasoil doubled in the last three weeks from 2 euros (USD2.16) per cubic metre per month to 4 euros, said Patrick Kulsen from Insights Global, a firm that tracks oil product storage and exports in the ARA region.

As most airliners ground their fleet because of the virus, jet fuel storage rates have increased by 50% since before the coronavirus crisis to 3 euros per cubic metre per month, a source with a storage firm in the ARA region said on condition of anonymity.

The picture in the Mediterranean is similar. In the last three weeks, Barcelona storage prices rose to USD3.5 per cubic metre per month from USD2.85 for storage for as far out as the end of 2021, a Mediterranean jet fuel trading source said. In Cushing, Oklahoma, the delivery point for benchmark U.S. crude, traders said rates more than doubled to 50 cents per barrel per month from about 20 cents a month ago.

Highlighting the current premium for storage, shares in Dutch storage company Vopak were trading close to their 2015 highs despite a global market rout in recent weeks. Vopak declined to comment and unlisted German storage firm Oiltanking did not respond to a request for comment.

As MRC informed earlier, major energy companies in the United States imposed work-from-home rules for office staff and began health checks for remote or critical workers as coronavirus spread and threatened an industry reeling from falling demand and profits. BP, Exxon Mobil, Kinder Morgan, Motiva Enterprises and Royal Dutch Shell told most office staff to work from home starting Monday. Federal regulators on Friday were pressed by companies to ease work rules for pipeline operators and to limit visits to some sites. Shell and Chevron began health checks of workers and visitors at some key U.S. facilities, spokesmen said.

As MRC informed earlier, operations at Italian petrochemical producer Versalis (part of Eni) have not affected by emergency quarantine measures in the country. Italian Prime Minister Giuseppe Conte extended its emergency coronavirus measures Wednesday evening and announced the closure of "non-essential" commercial businesses. This follows the announcement of a nationwide lockdown on Monday, limiting movement for around 60 million people. Under these measures people will only be allowed to leave their homes for work or health reasons. Versalis has three steam crackers in Italy, capable of producing 1.675 million mt of ethylene, 750,000 of propylene and 285,000 mt of butadiene a year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
Author:Anna Larionova
Tags:petroleum products, crude oil, petrochemistry, Crude oil.
Category:General News
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