(EnergyAsia, May 5 2010, Wednesday) --- Singapore’s trade in physical crude and major oil products reached a record high of 4.22 million b/d last year, breaching the four-million-b/d level for the first time. All the growth came from the products trade which expanded more than 11.9% year-on-year to 3.336 million b/d and helped offset the 12.24% drop in crude’s 890,464 b/d volume.

In value terms, Singapore’s physical oil trade experienced a sharp 23.2% drop to nearly S$143.2 billion, compared with 2008’s record S$186.8 billion. The decline was due largely to weaker oil prices last year after the record-setting levels of 2008. US crude futures kept mostly at the US$70-80 range through most of 2009, compared with the US$100-to- $147 level for most of 2008.

Last year’s strong performance has enabled Singapore to strengthen its position in the global oil trade, and is expected to continue into the decade ahead given the growing demand for energy in Asia and the Middle East.

Much of the growth the past decade took place from 2003 when US President George W. Bush ordered the military invasion of Saddam Hussein’s Iraq. Panicked buying and stockpiling around the world helped drive up the prices and volume of oil traded.

The total volume of crude and products traded through Singapore grew at an average 4.5% per year to reach a record of more than 4.22 million b/d in 2009 from 2.6 million b/d in 1998, according to data derived from state agency International Enterprise Singapore (IES).

Oil products provided all the growth, more than doubling from 1.55 million b/d to over 3.33 million b/d for an annual average growth rate of 7.2%. The crude trade was little changed over the 11-year period, reflecting the lack of growth in Singapore’s refining capacity and the rise of direct trade between crude oil producing countries and consumers. With Asia’s economies continuing to grow, Singapore’s role in the oil products trade is expected to expand.

2008 was a year of superlatives when the price of US WTI crude surged past US$100 a barrel for the first time, and reached a record US$147 a barrel in July. With crude oil holding above US$100 a barrel for most of the year, the value of Singapore’s crude and oil products trade reached a record S$187 billion in 2008. In 1998, when crude oil hit a low of US$10 a barrel, the value of Singapore’s oil trade fell to just under S$24 billion.

Several major trends have enabled Singapore to expand its role in the regional oil trade over the last two decades. This includes rising energy consumption in Asia and the Middle East, the growth in the two regions’ oil refining capacities, increased fuel stockbuilding and strategic stockpiling around the world, rising fears of supply disruptions caused by military conflicts and geopolitical tensions, and the rise of the 24/7 paper oil markets and derivatives.

EnergyAsia will be publishing a special report analysing Singapore’s physical oil trade since the Asian Financial Crisis of 1998. 

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