Dubai — The volume of oil products held in storage at Fujairah jumped to the highest level on record as tumbling regional demand from the coronavirus pandemic drives more supplies into the eastern UAE port.
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Stocks rose 6.3% last week to 26.192 million barrels as of Monday, with the greatest build seen in middle distillates, including jet fuel, according to data released Wednesday by the Fujairah Oil Industry Zone. The data has been provided exclusively to S&P Global Platts since January 2017. The previous all-time high was on February 24, 2020 at 25.98 million barrels.
Middle distillate inventories rose 18% in the week to 4.855 million barrels, the highest since December 23, 2019, the data showed. The aviation sector has been severely hurt by the coronavirus pandemic due to air travel restrictions, impacting both domestic and export demand for jet fuel. In India, the lockdown has been extended again until May 17 since it began March 25.
The rise in stocks came amid a steep contango in the derivatives market, enticing traders to seek storage options with the intention of reselling the cargoes at a higher price later. There's at least one cargo of jet fuel in floating storage off the coast of Fujairah, according to cargo tracking data from Kpler.
In heavy distillates and residues, stocks climbed 12% to 14.621 million barrels, a three-week high, the data showed. Buyers of shipping fuel have been looking to stock up following the easing of movement restrictions in Dubai, sources previously told Platts. Some traders of bunker fuel said they were receiving inquiries for end-May deliveries. As of Tuesday, Fujairah delivered 380 CST bunker fuel was assessed at $143/mt, cheaper than Singapore at $145.75/mt.
Moving against the trend, light distillate stockpiles dropped 10% to 6.716 million barrels. Light distillates include gasoline, gasoline blending components such as reformate and alkylate, naphtha and other light petrochemical feedstocks and condensates.
Fujairah has the Middle East's largest commercial storage capacity for refined products.