Dubai — Oil product inventories at the UAE's Port of Fujairah climbed to a five-week high led by a record increase in fuel oils for power generation and marine bunkers.
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Total stockpiles stood at 20.77 million barrels as of April 5, up 7.7% from a week earlier and the highest since March 1, according to Fujairah Oil Industry Zone data released April 7 exclusively to S&P Global Platts. Stocks of heavy distillates covering fuel oil for power generation and marine bunkers soared 36% over the same period to 11.211 million barrels, the highest since Jan. 18.
Fujairah-based bunker suppliers over the course of the week ended April 3 confirmed their ability to once again offer low sulfur marine fuel bunker for prompt delivery dates, after domestic supply was compromised earlier in March when Uniper Energy's 80,000 b/d refinery unexpectedly suffered an outage in the week of March 7, leading to both crude processing units shutting down.
In response to the supply tightness, at least three Suezmaxes from Europe and the Mediterranean carrying low sulfur fuel oil destined for Singapore were diverted to Fujairah, traders said.
Easing supply tightness also saw the spread between the Singapore and Fujairah marine fuel 0.5% sulfur assessments return to positive territory at $2.88/mt on March 30, Platts data shows. The spread has since edged up to be assessed at $4.73/mt on April 6.
"Fujairah bunker prices rose to a sizable premium over Singapore last month, but supply tightness has eased since the restart of Uniper's refinery," Alex Yap, a senior analyst at Platts Analytics in Singapore, said. "So, we are seeing somewhat of a reversion back to more normal stock levels."
Fuel oil supplies are needed ahead of the Middle East's big power season when air conditioning demand peaks.
When OPEC and its partners abruptly agreed April 1 to loosen their quotas and add more than 2 million b/d into the market by July, Saudi energy minister Prince Abdulaziz bin Salman said that Middle Eastern domestic crude consumption should rise with air conditioning demand in the summer, so a chunk of Saudi Arabia's returned production will not be exported.
Last year, Saudi Arabia's direct use of crude burned for power generation began climbing month over month in April and peaked for the year in August, according to the Joint Organizations Data Initiative.
Stocks of middle distillates such as jet fuel, gasoil and kerosene fell to 3.348 million barrels as of April 5, down 5% from a week earlier and the lowest since April 13, 2020. Light distillates including gasoline and naphtha tumbled 17% to 6.211 million barrels, the lowest since Nov. 9, 2020.