Switzerland cuts oil product stock requirements

Switzerland is temporarily lowering its required level of oil product stocks, with logistical issues on waterways and railways tightening supply in the country.

The Federal Office for National Economic Supply (FONES) today said the level of compulsory national stocks will be cut by 6.5pc, or 245,000m³, from 25 July to the beginning of September.

How this is broken down between products is unclear, but the total would equate to around 1.5mn bl of product, the equivalent of more than 205,000t of diesel or 180,000t of gasoline.

The relaxing of compulsory stock levels is aimed at ensuring oil product supply. FONES noted a prolonged drought has lowered water levels on the Rhine, limiting loading capacities of barges on which Switzerland is reliant for supply, and staff shortages and construction work are causing sizeable delays to cross-border railway traffic.

Earlier this month Rhine water levels at the Kaub bottleneck were just 88cm, meaning barges heading for Kalsruhe and Basel could only be loaded at around 30-40pc of their capacity. Barge broker Riverlake said today Kaub water levels are 80cm and will fall to 72cm in the next three days, which would reduce barge loading abilities even further.

As water levels have hit record lows, barge availability has dipped and freight rates have hit record highs. Barge rates from Rotterdam to Cologne are €35/t today, according to Riverlake, compared with €25.50/t on 14 July. Rates from Rotterdam to Birsfelden in Switzerland hit 125 Swiss francs/t ($139/t), from SFr120/t on 21 July. That is almost twice as high as on 14 July, when rates from the Amsterdam-Rotterdam-Antwerp (ARA) hub to Switzerland were SFr75/t, and is only SFr20/t below the highs set in the fourth quarter of 2018, when low Rhine water levels severely hindered supply to inland markets.

Liquidity in the German diesel barge market at ARA has evaporated in recent weeks. Just over 4,000t of spot product changed hands in July to date in the afternoon trading window, compared with more than 13,000t in June, 5,000t in May, and more than 90,000t in April.

The last time compulsory Swiss product stock levels were cut was also in 2018.

By Elliot Radley