Floating storage holding up despite Iran drop

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Oil is ticking higher today, as the market continues to bet on the prospect of market tightening. As Nonfarm payrolls beckon tomorrow, hark, here are five things to consider in oil markets today.  

1) While total global floating storage is ticking lower, it is still holding above 100 million barrels. Two areas where we are seeing it gradually drawn down is off Singapore / Malaysia, and in the Persian Gulf. After being over 30 million barrels as recently as October, Iranian floating storage has been siphoned to supplement exports – underscoring the Persian Gulf state’s struggles to boost domestic production.

This week we have seen Iranian barrels drop to 5 million barrels, while barrels offshore of United Arab Emirates have halved in the last week, dropping to just under 10 million barrels.

crude waiting Persian Gulf.jpg

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2) We have seen a distinct change in appetite from China, as March deliveries of medium and heavy crude have increased considerably, while light imports have dropped off.  As imports from the Middle East have dropped by half a million barrels per day, arrivals from West Africa have reached the highest on our records, close to 1.5mn bpd.

This record volume has been led by a rebound in Angolan arrivals, but also by rising imports from Nigeria, Equatorial Guinea, Gabon and Ghana. Over 70 percent of this crude is medium or heavy.

WAF into China March.jpg

3) While on the topic of China, there have been a number of developments this week. One is that the Chinese government has granted import quotas to two independent refiners – to Henan Fengli Petrochemical Company (for just over 16 million barrels) and to Shandong Zhonghai Chemical Group Co (for 13.6mn bbls), which will serve to boost import demand in the coming months. 

Another is that it has issued a second batch of 2017 product export quotas, but has slashed them to three of the country’s leading oil companies: Sinopec, CNOOC and Sinochem Quanzhou. The first batch of product export quotas for the three companies were