Dubai — Stockpiles of bunker fuels and other heavy residues and distillates climbed to a record in Fujairah this week, as shippers switched fuel types to meet new rules taking effect in January, according to data released Wednesday by the Fujairah Oil Inventory Zone.
Heavy distillates and residues rose 10% week over week to 15.425 million barrels as of Monday, the most since data began to be compiled in January 2017.
Demand is shifting from high sulfur fuel to low sulfur fuel as the International Marine Organization regulation looms, said Apurva Mali, sales manager at Masc Co DMCC, a broker in bunker fuels in Dubai.
"This is all related to changes coming up from January, some places have already switched to low sulfur and some have to get their tanks cleaned up," he said. "There is less demand for the high sulfur fuel."
The price of 380 CST high sulfur bunker fuel has "dropped quite a lot" and is currently about $264/mt at Fujairah, he said. That compares with Fujairah-delivered marine fuel 0.5% sulfur at $555-$560/mt, according to S&P Global Platts. The IMO rule requires ships to lower their fuel sulfur content to no more than 0.5%, from 3.5% currently.
All product categories showed gains in stockpiles over the past week, bringing the total up 10% to 25.140 million barrels, the highest since April 29.
The biggest increase came from light distillates, which climbed 11% to a four-week high of 6.198 million barrels. Light distillates covered in the report are gasoline, naphtha and condensates that are stored in white product tanks and have an API of 45 degrees and above.
Middle distillate stocks advanced 9% to a one-year high of 3.517 million barrels. The category includes gasoil, diesel, marine gasoil, jet fuel and kerosene.
The East of Suez gasoil market has seen an increase in distillate exports out of China, according to a Platts report Wednesday. The country's state-owned refiners are trying to use up their oil product quotas before the end of the year. This higher outflow comes at the same time there are unsold cargoes in the region, according to the Platts report.
S&P Global Platts is the official publisher of the oil products data. Fujairah has the Middle East's largest commercial storage capacity for refined products.
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