Glencore , the world's largest diversified commodities trader, has booked a supertanker to store part of the nearly four million barrels of gas oil it purchased in July, industry sources said on Monday.
Glencore, which bought at least 3.75 million barrels of 0.5 percent sulphur gas oil, is expected to take delivery of the Very Large Crude Carrier (VLCC) Pu Tuo San in Singapore, shipping sources said. The storage option listed for the supertanker is for six months, shipping sources said.
"For the moment there is no indication that they will sail this supertanker out of the region ... it's going to be sitting somewhere outside Singapore," a shipping source said.
The VLCC is being chartered from Singapore oil company Hin Leong's shipping arm Ocean Tankers for $25,000 per day, shipping sources said.
Glencore and Hin Leong were not immediately available for comment.
GAS OIL PLAY?
Combined, Glencore and Hin Leong have purchased almost 7 million barrels of gas oil. Hin Leong bought around 3 million barrels of 0.5 percent sulphur in July.
Glencore also picked up large volumes of gas oil swaps in July, having accumulated at least 4 million barrels of the July fixed-price contract and 2.75 million barrels of the August swap, Reuters data showed.
The Swiss trader also purchased at least 2.15 million barrels of the July/August gas oil timespread.
The company's surge in diesel trading activity coincides with the arrival of veteran middle distillates trader Steven Chiang at Glencore, who joined them at the start of July from Barclays Capital.
Gas oil demand had been poor in July but is expected to pick up in the region, with outlets seen in China, Indonesia and Vietnam.
China's recent decision to remove import duties on middle distillates is expected to entice refiners to buy fuel from international markets.
"Demand for diesel usually picks up in the third quarter, and with the removal of the tariffs we could see more buying from international markets than previously," a trader said.
Traders said the gas oil bought by Glencore and Hin Leong could also be destined for Indonesia, which will see higher demand ahead of the Ramadan fasting month which begins on Aug 1.
Front-month-Asia gas oil cracks at mid-day was valued at around $18.68, up about 40 cents from the previous session, while the contango has improved 5 cents to 55 cents, Reuters data showed.