Chinese state energy giant CNPC said on Tuesday it has sold its first ever gasoline to the Americas, with a 35,000-tonne cargo setting sail for the Bahamas on March 30.
The long journey of Chinese gasoline to the Americas is the latest indicator of a refined product supply overhang building in Asia as well as in Europe and as China’s refined fuel inventory hit a record high in February.
China’s stocks of refined products hit 21.55 million tonnes at the end of February, up from 18.97 million tonnes in January, official Xinhua data showed.
“Cross market trade of fuel between Asia and the Americas is one of the most sophisticated physical commodities trade due to the long distance and difference in fuel standard and pricing models,” CNPC said in a statement posted on its website. “We are able to deliver the cargo using charted ships as we locked the spread between the two markets in a timely way.”
CNPC’s tanker storage asset in Bahamas also allowed the company to put excess fuel and even play arbitrage, traders said. CNPC, parent of PetroChina, started selling its diesel to the Americas in 2015 due to the domestic surplus. Exports have totaled 840,00 tonnes so far, with destinations including Brazil and Peru.
The emerging glut is in part due to healthy profit margins for refining gasoline, known as cracks.
The Singapore gasoline crack has risen nearly 14 percent since its March low to more than $8 per barrel, its highest level in almost a month.
Reporting by Josephine Mason and Meng Meng; Additional reporting by Li Peng Seng; Editing by Himani Sarkar and Manolo Serapio Jr.