Fujairah's June HSFO ex-wharf premiums fall; stockpiles elevated

Term contractual supply of ex-wharf 380 CST high sulfur fuel oil at the UAE's bunker hub of Fujairah for June loading dates were inked at premiums of $4-$8/mt to Platts FOB Arab Gulf 180 CST HSFO cargo assessments, traders said June 1, below premiums of $9-$13/mt concluded for May's supply.

Substantial volumes of June-loading term HSFO ex-wharf cargoes were concluded at $4-$5/mt premiums, around the lower end of the overall range, while recent offers were at premiums of $5-$7/mt, traders added.

"Premiums for June's [HSFO] ex-wharf cargoes look slightly softened [from May], indicating that offers are ready to trend even lower," a Fujairah-based bunker supplier said June 1.

The port of Fujairah is expected to remain well supplied with HSFO cargoes owing to steady imports, which could pressure downstream market fundamentals too, local traders said, though exports towards the Far East could slow inventory builds.

Two shipments totaling 806,895 barrels, or 127,070 mt, of HSFO originating from the Russian ports of St. Petersburg and Ust Luga are bound for discharge at Fujairah port on June 11 and June 16, respectively, according to latest data by Kpler.

As any notable fuel oil diversions to the Middle Eastern utility sectors have yet to materialize in the summer season, consumption for power generation has not lent much support to the HSFO market, traders also said.

Stocks of heavy distillates at Fujairah port rose 7.6% week on week to a two-week high of 11.999 million barrels, according to May 31 data from the Fujairah Oil Industry Zone.

Bunker premiums dip

Sellers eager to move their HSFO cargoes were also seen offering aggressively to undercut competitors and capture inquiries of sizable stems, despite steady demand overall, according to Fujairah's bunker suppliers.

"Prompt availability [of barge slots] is more limited, but most players are able to deliver within six-to-seven days," a Fujairah-based trader said June 1.

Although the above-average bunker demand has slightly tightened barge schedules for some players, offers for refueling dates as early as same-day or next-day deliveries were seen to still be available as of May 31, according to local bunker suppliers.

Some sellers were also forced to turn down numerous HSFO inquiries in recent days despite a consistent flow of requirements from end-users, as prompt barge slots were steadily filled, the bunker suppliers added.

The Platts Fujairah-delivered 380 CST HSFO bunker premium over the FO 380 CST 3.5% FOB Arab Gulf cargo assessments most recently fell to a six-month low of $19.96/mt May 29, before inching up to $21.63/mt May 31, according to data from S&P Global Commodity Insights.