FUJAIRAH DATA: Oil product stocks climb as light distillates avert record low

Dubai — Oil product stockpiles at the UAE's Port of Fujairah climbed to a two-week high as light distillates rebounded amid signs of slowing gasoline exports.

The total inventories stood at 23.445 million barrels as of May 17, up 5.4% from a week earlier as light distillates stockpile jumped 20%, the biggest gain in six months, according to Fujairah Oil Industry Zone, or FOIZ, data provided exclusively to S&P Global Platts. The latest update, published May 19, showed stocks of middle distillates such as jet fuel hit a three-week low and heavy distillates such as fuel oil for marine bunkers and power generation were at a two-week high.

Stocks of light distillates climbed to 6.122 million barrels as of May 17, after hitting 5.096 million barrels a week earlier, the lowest since the record low of 4.198 million barrels on Oct. 26, 2020.

Refinery outages across the Middle East and higher export demand had limited gasoline supplies, leading to rising prices in the region. The cash differential against the Platts Arab Gulf 92 RON gasoline assessment climbed over $5/b in April for the first time this year, according to Platts data. The trend has reversed its course in recent weeks, with the assessment down to $4.70/b on May 18.

"There could be a transitory increase, just that cargoes are still to load up," a Middle East-based trader said, adding that he was surprised that light distillates inventories climbed. "They should be drawing like everywhere else. It's a backward market, there's less oil moving into the region and the cargoes nearby are being supplied by the AG (Arab Gulf). It's a function of arb, and the arb doesn't work to bring it in from elsewhere."

Another trader said the higher light distillates inventories could be related to India, which is grappling with a second-wave of COVID-19 crisis. "[It] Could be [possible that] more Indian cargoes headed this way," a trader in Saudi Arabia said.

Narendra Taneja, an energy expert on India, estimated that India's oil demand in some parts of the country could be down 20% to 25%. "I'm pretty confident when you look at ground realities, things are going to get under control sooner than many people are saying in the western part of the world," he told a Gulf Intelligence webinar on May 18.

Gasoline exports from Fujairah are slowing, with no shipments to Pakistan, Saudi Arabia, Tanzania or Singapore recorded in the week started May 10, according to Kpler. Overall gasoline exports in the week were only 348,000 barrels, a one-year low, the Kpler data show.

The total may be closer to 465,000 barrels, the lowest since September 2020, as gasoline shipments to Pakistan and Tanzania should be added to the system, according to Kpler.

Stocks of middle distillates stood at 3.738 million barrels as of May 17, down almost 9% from a week earlier, while heavy distillates were at 13.585 million barrels, up 4% from a week earlier, the FOIZ data showed.

Fuel oil inventories are needed as the Middle East heads into the hot summer months when air conditioning usage spurs power demand. Dubai's sole electricity provider, DEWA, puts its peak load usually in August or September.

Platts uses blockchain to collate the FOIZ inventory data which has been published since January 2017.