FUJAIRAH DATA: Oil product stocks fall to three-week low as exports to China pick up

Stockpiles of oil products at the UAE's Port of Fujairah fell 3.2% to a three-week low in the week ended March 11, as exports of clean products and fuel oil to China picked up, according to the Fujairah Oil Industry Zone and shipping data.

The total dropped to 18.2 million barrels as of March 11, the lowest since Feb. 19, the FOIZ data published March 13 showed. Stockpiles have increased 5% since the end of 2023.

Stocks of light distillates such as gasoline and naphtha fell 15% to 7.083 million barrels after hitting a 10-month high a week earlier, the data showed. Middle distillates, including jet fuel and diesel, dropped 2.8% to 1.5 million barrels -- the lowest in six months. At the other extreme, inventories of heavy distillates used as fuel oil for power generation and shipping climbed 7.2% to a two-month high of 9.617 million barrels.

Clean product exports to China jumped 543,000 barrels on the week to 1.43 million barrels in the week started March 4 -- the highest since November 2020, according to S&P Global Commodities at Sea data. Fuel oil shipments -- all heading to China -- in the latest week came to 446,000 barrels, compared with 471,000 barrels a week earlier.

China's independent oil refineries in February were already taking in more imports of feedstock declared as fuel oil and "other fuel oil" to produce transportation fuels, as they sought to preserve their 2024 crude import quotas, S&P Global Commodity Insights reported March 12. The independent refineries have been cautious about utilizing their crude import quotas this year due to tighter allowances received in 2024 compared with 2023, according to the report.

For Fujairah, total exports of oil products in the week started March 4 dropped to 4.1 million barrels from 5.8 million barrels a week earlier, S&P Global shipping data showed.

So far since the end of 2023, stocks of light distillates have climbed 51%, while those of middle distillates and heavy distillates have dropped 40% and 5.2%, respectively, over the same period.

Ample stocks for bunker demand

The high sulfur fuel oil market around the UAE's bunker hub of Fujairah has persistently come under pressure amid ample cargo availabilities, even though downstream end-user requirements were seen as rather steady, traders said.

"Most of the market is doing okay on HSFO availabilities," a Fujairah-based trader said, adding that prompt barging schedules are also ample for near refueling dates.

Owing to some eagerness among suppliers "keen to sell" and draw down HSFO stocks, competition for shipowners' inquiries for substantial volumes has reportedly heated up, gradually weighing on delivered premiums even as demand stays buoyed, according to local bunker suppliers.

The Platts-assessed Fujairah-delivered 380 CST HSFO bunker premium over the FO 380 CST 3.5% FOB Arab Gulf cargo fell to an average of $17.70/mt over March 1-12, compared with the $22.99/mt average through February, according to S&P Global data.

Recent less-than-ideal weather events created some backlog of orders around Fujairah port, leading to tighter-than-usual low sulfur fuel oil barge schedules around the hub for prompt refueling dates, traders said.

However, adequate LSFO inventories continued to limit any significant upswings in bunker premiums despite barging lead times that have been rather extended to at least nine to ten days out, according to bunker suppliers.

The Platts-assessed Fujairah-delivered marine fuel 0.5% sulfur bunker premium over benchmark FOB Singapore marine fuel 0.5%S cargo values averaged higher at $17.42/mt over March 1-12, compared with the $13.12/mt average through February, S&P Global data showed.