FUJAIRAH DATA: Oil product stockpiles rebound from 2-month low

Stockpiles of oil products at the UAE's Port of Fujairah climbed to a two-week high as of June 19, with all categories showing gains from a week earlier, according to June 21 data from the Fujairah Oil Industry Zone.

Total inventories rose 12% on the week to 21.838 million barrels as of June 19 after hitting a two-month low a week earlier on June 12, FOIZ data provided exclusively to S&P Global Commodity Insights showed. Total inventories were up 5.7% since the end of 2022.

Heavy distillates used as fuel oil for power generation and shipping rose 4.7% over the week to 9.813 million barrels, a two-week high. Light distillates such as gasoline and naphtha gained 12% to 7.429 million barrels after falling to a seven-month low a week earlier. Middle distillates such as diesel and jet fuel jumped 29% to 4.596 million barrels, a four-week high, according to data compiled by S&P Global since 2017.

Oil product exports except for fuel oil from Fujairah averaged an estimated 345,000 b/d in the week started June 12, down from 893,000 b/d a week earlier, according to S&P Global Commodities at Sea data.

Malaysia was the top destination at 157,000 b/d and Oman was next at 75,000 b/d, the data showed. Fuel oil shipments averaged 90,000 b/d in the week started June 12, well below 250,000 b/d in the week earlier, with 72,000 b/d heading to Kuwait, while the remaining indicated Saudi Arabia as the destination, the data showed.

Middle distillate stocks were up 49% so far in 2023. Light distillates slipped 0.5% while heavy distillates dropped 3% over the same period.

Bunker demand capped

Underwhelming bunker demand in both the low and high sulfur fuel oil segments gradually buoyed inventories around Fujairah port, despite sellers' best efforts to draw demand by offering aggressively, according to local traders.

"LSFO demand is not great. Most buyers sought top-up volumes with only few requirements for full bunkering. Despite a reasonable number of inquiries, overall [sales] volumes stayed low," a Fujairah-based bunker supplier said June 21.

As LSFO bunker demand struggled to keep pace with rising supplies, sellers were recently seen "very keen" to clear more stocks to increase ullages, even offering out delivered marine fuel 0.5% parcels at discounts or flat to the benchmark FOB Singapore Marine Fuel 0.5%S cargo assessments, traders said.

"At least three to four suppliers are aggressive, some LSFO [delivered] deals went at discounts," a second bunker supplier said June 21, adding that components for the LSFO blending pool were seen more than ample around the UAE.

The Platts Fujairah-delivered marine fuel 0.5%S bunker premium over the benchmark FOB Singapore Marine Fuel 0.5%S cargo value most recently slumped to an over 22-month low of 39 cents/mt June 19, before inching up to 45 cents/mt June 20, according to S&P Global data.

This bunker premium was last lower at 30 cents/mt Aug. 12, 2021.

"Overall since June, HSFO requirement has not been as much as it was in May. There was a lot more demand in May," the second bunker supplier said, adding that demand in June has been healthy but moderate at best.

Competitive offers in the HSFO market also capped Fujairah's bunker premium, while more players are likely to secure more long-term contracts to stabilize sales volumes, according to traders.

The Platts Fujairah-delivered 380 CST HSFO bunker premium over the FO 380 CST 3.5% FOB Arab Gulf cargo assessment softened to a near three-week low of $22.45/mt June 20, down $3.86/mt day on day, S&P Global data showed.