Global 10-day floating inventories, excluding Europe and Africa, drew between August 13 and 20. The 10-day floating storage helps monitor congestion at ports, which is now at its lowest level since February 26 of this year.
The Middle East Gulf registered a draw for the 10-day idle period and a build for the 30-day idle period. Iran is still discussing shutting down the Strait of Hormuz when US sanctions hit the country, which would severely hamper traffic in the region.
Singapore & the Strait of Malacca registered the most significant weekly movement as floating inventories decreased by a large margin. The region has been drawing continuously since a major build was recorded on May 14, decreasing by 31% of idle 10-day inventories in a little over three months.
China, on the other hand, registered a minor draw. The vessels are currently idling around the southern and northern ports, with little discrepancy between the 10-day storage volumes and the 30-day storage volumes.
Measuring 30-day storage is useful for determining real floating crude storage, not just what is waiting to unload. As prices have increased in the past year total 30-day storage is now a little under half the level it was at in August 2017.
Last week, the Brent 6m-2m spread corrected at $0.56/b backwardation. The Brent term structure will be key to watch in the coming weeks. The spread change was representative of early signs of a potential return to fundamentals after the divergence observed in July, where Brent time spreads moved into contango despite the falling global inventories.
The US Gulf also registered a significant draw, though they were smaller than the draws registered in Singapore.
The 30-day floating inventories increased last week, with the Middle East Gulf and West & Southern Africa leading the build. In other regions, builds were measured except in Europe, Singapore & the Strait of Malacca, where inventories decreased.