Fujairah Data: Bunker fuel stocks jump to 5-week high with demand seen worsening

Dubai — Oil product stockpiles in the Middle Eastern hub of Fujairah climbed 8.1% on the week during March 23-30, with bunker fuel inventories jumping to a five-week high, according to data released Wednesday from the Fujairah Oil Industry Zone.

Heavy distillates and residues, which include fuel used by shippers and for power generation, jumped 9% to 14.486 million barrels. This was highest since the week to February 24, when the stockpiles were at 15.167 million barrels, according to the data compiled by S&P Global Platts.

Total stockpiles of oil products as of Monday came to 22.897 million barrels, a four-week high.

Marine and other heavy fuel inventories were still below the record 15.425 million reached in November 2019, even as the coronavirus pandemic has sapped global economic growth this year. Now that container shippers are ready to renew contracts for marine fuel, the heavy fuel stockpiles are likely to soar, according to Apurva Mali, sales manager at Masc Co DMCC, a Dubai-based broker in bunker fuels.

"The container industry has not been showing any obvious signs yet of a global trade slowdown, but they were fulfilling earlier contracts booked before the coronavirus took full effect," Mali said.

"Now that the supply chain has been disrupted and there is reduced demand for finished goods, which container ships carry, there will of course be a reduction in shipping which will then lead to a reduction in demand of bunker fuel that is purchased in Fujairah."

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With demand slowing because of the coronavirus, traders will be looking for storage space to hold products for later usage when demand is back. Crude oil prices are already in contango, with prices higher the later the date.

"Tankage in Fujairah obviously has become a lot more valuable in terms of what is available to store. I think that over the past week it has been filling up with products. I think the real weak spot right now in the market is the availability of crude oil storage," Chris Bake, member of the executive committee at Vitol Group said Wednesday at a Gulf Intelligence event.

"Unfortunately the availability of free market incremental crude oil storage in Fujairah is limited, but we will see all available storage full if it is not already full in the next week to 10 days."

Middle distillates stockpiles jumped 24% to 2.304 million barrels after falling 39% in the week earlier. Middle distillates include jet fuel, kerosene, gasoil, diesel and marine bunker gasoil.

"Right now, global trade is not moving the way it normally does because of the lockdown, because of restrictions, because of people not moving, because people are not driving enough, they're not consuming enough," Mali said.

Spot gasoil volumes were seen in the Arab Gulf with Kuwait Petroleum Corp. awarding its second gasoil tender for April loading at a discount to the Mean of Platts Arab Gulf gasoil assessments, FOB, according to a Platts report Wednesday. The refiner previously sold a similar gasoil cargo for loading over April 15-16 at a premium.

Light distillate stocks rose 2% on the week to 6.107 million barrels after falling 15% in the week earlier. "A weak global oil complex and tepid demand for gasoline continued to exert downward pressure on the East of Suez gasoline market," Platts said in the report Wednesday.

Light distillates also include gasoline blending products such as reformate and alkylate, and naphtha and other light petrochemical feedstocks and condensates that are stored in white product tanks.

Platts holds exclusive rights to publish Fujairah oil products inventory data, and has deployed a blockchain network for its collation.