Singapore — Stockpiles of heavy distillates and residues in Fujairah surged to a 21-month high as more fuel oil cargoes have been flowing into the market lately, trade sources said Thursday.
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The stocks jumped 8.9% to 12.425 million barrels in the week to April 22, data released Wednesday by the Fujairah Oil Industry Zone showed. This marks the highest level since July 17, 2017, the data showed.
The higher fuel oil cargo inflow has not been digested by average downstream bunker demand for the past few weeks, sources said.
Fuel oil inflow from Iran and Iraq has also increased in recent weeks, sources said.
Seasonal demand for fuel oil from Saudi Arabia has not kicked off either, they added.
"Once Saudi Arabia starts buying more HSFO to meet air-conditioning demand for summer, the fuel oil supply glut will ease," a second trader said.
According to trader estimates, Saudi Arabia bought more than 1 million mt of HFSO a month over May-September last year.
Meanwhile, some market participants were trying to capitalize on higher flat prices now that crude has gone up, sources said.
"Some are betting on the crude price uptrend to continue and are hence stocking up more cargoes... if the market heads up more they make money by selling," a third trader said.
The White House announced Monday that the US would end all waivers from Iran oil sanctions when they expire May 2. The move led to a boost in crude futures this week.
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