FUJAIRAH DATA: Fuel oils push oil products stocks to two-month high

Oil products inventories at the UAE's Port of Fujairah climbed to a two-month high as of July 7, with gains led by fuel oils used for power generation and shipping, according to Fujairah Oil Industry Zone data published July 9.

The total rose 8% to 20.685 million barrels in the week to July 7, the fifth consecutive weekly increase and the longest stretch of gains on record since the port began sharing the inventory data with Platts, part of S&P Global Energy, in 2017.

Stockpiles of heavy distillates used as fuel oils increased 15% to 10.255 million barrels, a two-week high, while light distillates including gasoline and naphtha rose 8.5% to 8.124 million barrels, the most in seven weeks. Middle distillates such as jet fuel and diesel dropped 15% to 2.306 million barrels, the first drop in five weeks from a three-month high a week earlier.

The Platts-assessed ship fuel prices have held losses from recent highs, with 0.5% sulfur fuel delivered Fujairah at $517/mt on July 8, down from $555/mt on June 19. High-sulfur fuel oil delivered Fujairah was at $408/mt on July 8, down from $465/mt on June 19, according to Platts data.

Other product prices in the region have been mixed, with unleaded gasoline 92 RON FOB Jebel Ali at $75.17/b on July 8, down from a recent high of $83.39/b on June 20. Naphtha FOB Arab Gulf was at $549.56/mt on July 8, up from $519.42/mt on June 27, while jet fuel FOB Arab Gulf was at $83.34/b on July 8, up from $79.59/b on June 24, and gasoil FOB Arab Gulf was at $86.86/b on July 8, up from $82.27/b on June 24.

Fuel oil exports to Egypt from Fujairah are averaging 147,000 b/d this month, the most since at least 2016, according to S&P Global Commodities at Sea data. Naphtha shipments from Fujairah are averaging 191,000 b/d, up from 62,000 b/d in June, and heading for Japan, India, Singapore and Thailand, the CAS data showed.

Total stocks have climbed 33% since the end of 2024, with heavy distillates up the most at 37% followed by light distillates up 34% and middle distillates up 17%.

Bunker demand capped

Limited demand for low sulfur fuel oil around Fujairah's downstream markets continued to pressure delivered premiums and slow stock draws, while prompt barging schedules are also mostly adequate for the near term, a trader said.

A Suezmax-sized LSFO cargo -- reported to be sourced from neighboring Kuwait -- recently found home in Fujairah around the start of July, replenished inventories and kept stocks sufficient.

Despite this, downstream players with monthly cargo requirements are feeling the heat as ex-wharf valuations for July-loading contracts remained steady around high single-digit premiums, thereby thinning profit margins from downstream deliveries.

High sulfur fuel oil supply dynamics were seen slightly more balanced against demand flow in the recent couple of weeks, though still ample for most of July, as demand pull from Egypt's consumption in the utility sector provided an additional cargo outlet.

Thus, differentials in both Fujairah's HSFO delivered and ex-wharf have seen a "marked improvement", traders said, although tough competition in the downstream market may soften any strong upswings.

Overall demand pull for power generation uses during the Middle Eastern peak summer season has not lent HSFO significant price support to date, as players continue to eagerly move cargoes and sell for prompt refueling dates amid healthy stock availabilities.