Oil product stockpiles at the UAE's Port of Fujairah dropped for the first time in three weeks after a record shipment of fuel oil to Saudi Arabia ahead of peak summer power demand.
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The total inventory was 17.742 million barrels as of May 16, down 3.1% from a week earlier and the lowest in two weeks, according to data from the Fujairah Oil Industry Zone provided exclusively to S&P Global Commodity Insights on May 18. Heavy distillates and residues used as fuel oil for power generation and marine bunkers dropped 6.6% to 10.342 million barrels over the same period, the second consecutive weekly decline to the lowest since March 28.
A record weekly shipment of 780,000 barrels of fuel oil was headed for Saudi Arabia from Fujairah for the week started May 9, according to Kpler data. Saudi Arabia's energy minister Prince Abdulaziz bin Salman told a conference in Bahrain on May 16 that Saudi Arabia burns crude oil and fuel oil for power generation, and the fuel oil is imported "at a high cost."
The kingdom aims to boost natural gas's share in the domestic power generation to 50% by 2030, leaving more crude oil for export, he said. Power demand in the region rises in summer as temperatures rise, boosting use of air conditioning, and then retreats in winter. Last year, Saudi Arabia's peak crude burn was in July, according to the Joint Organisations Data Initiative.
Middle distillates stocks at Fujairah stood at 1.706 million barrels as of May 16, down 11.3% from a week earlier and the first drop in four weeks. Light distillates rose 6.9% to 5.694 million barrels, the highest since March 28.