Oil product inventories at the port of Fujairah were little changed in the week to Monday, after nearby incidents of sabotage of vessels and volatility in crude prices kept buyers at bay, according to data released Wednesday by the Fujairah Oil Industry Zone.
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Stockpiles rose 0.5% over the week to 23.832 million barrels, the smallest percentage change since the week ended March 11. Inventories of marine fuels and other heavy distillates and residues climbed 7% to 11.091 million barrels after falling to a five-week low in the prior week.
Volatility in upstream crude prices throughout the week kept some bunker buyers on the sidelines, trade sources in Singapore and Fujairah told S&P Global Platts.
Front-month July Brent futures fell 1.9% on May 7 and rose 1.1% the next day. The spread between front-month and second-month ICE Brent futures contracts surged last week above the $1/b mark for the first time in nearly six years. Brent fell 0.5% in Wednesday trading.
Recent attacks on oil tankers near the geopolitically sensitive Strait of Hormuz have raised the specter of oil supply disruptions in the Middle East at a time when US sanctions against Iran and Venezuela have already been curbing output.
The port of Fujairah lies outside Hormuz in the Gulf of Oman and is considered an alternative bunkering hub in case of disruptions in the Persian Gulf.
A Fujairah port source said operations were "business as usual" and there were no increased security measures after the incident.
On Tuesday, the Saudi Press Agency said Saudi Aramco's key East-West oil pipeline suffered limited damage from armed drones, and referred to the incident as a "terrorist and sabotage act".
Uniper Energy DMCC, which operates one of two refineries at Fujairah, has about 1 million mt of storage capacity for oil products across three terminals at the port, with a stockpile of about 300,000 mt of low sulfur fuel oil, Chris Wood, managing director of Uniper Energy, said.
The company, part of Germany?s Uniper, is currently shipping 154,411 mt of LSFO from Fujairah to Singapore, with delivery set for Thursday. The largest-ever shipment of LSFO was loaded between May 1 and May 4, and did not affect Fujairah's total inventories because the product was directly loaded after refining, with minimal storage involved, Wood said.
The market structure for July and August ICE Brent Futures contracts settled at a steep backwardation of $1.02/b as of 4:30 pm Singapore time (0830 GMT) on Monday. The spread was last higher on September 17, 2013, according to data compiled by Platts.
The volatility was also evident in Fujairah bunker prices. Last Wednesday, Fujairah-delivered 380 CST bunker fuel fell $7.10/mt on the day. On Friday, it jumped $4.40/mt to $424.15/mt, according to data from the Platts Market on Close assessment process.
Light distillate product inventories fell 3% over the past week to 10.46 million barrels, a two-month low, while middle distillates declined 12% to 2.281 million barrels, according to the FOIZ data.
The Fujairah data is published every Wednesday via Platts Global Alerts.
-- Claudia Carpenter, firstname.lastname@example.org
-- Edited by Dan Lalor, email@example.com