- Stockpiles of bunker fuels and other heavy residues and distillates climbed to a record in Fujairah.
- This is because shippers switched fuel types to meet new rules taking effect in January 2020.
- Heavy distillates and residues rose 10 percent to 15.425 million barrels, the highest since January 2017.
According to an article published in Emirates News Agency, stockpiles of bunker fuels and other heavy residues and distillates climbed to a record in Fujairah this week.
Increase in fuel stocks
The increase has been attributed as shippers switched fuel types to meet new rules taking effect in January 2020, according to data released Wednesday by the Fujairah Oil Inventory Zone, FOIZ.
Heavy distillates and residues rose 10 percent to 15.425 million barrels as of Monday, the highest since data began to be compiled in January 2017.
Demand is shifting from high sulphur fuel to low sulphur fuel as the implementation of the International Marine Organisation regulation looms, said Apurva Mali, sales manager at Masc Co DMCC, a broker in bunker fuels in Dubai.
Change attributed to IMO 2020
“This is all related to changes coming up from January, some places have already switched to low sulphur and some have to get their tanks cleaned up,“ he said. “There is less demand for high sulphur fuel.”
The price of 380 CST high sulphur bunker fuel has “dropped quite a lot“ and is currently about the US $264/mt at Fujairah, he said. That compares with Fujairah-delivered marine fuel 0.5 percent sulphur at the US $ 555-$560/mt, according to S&P Global Platts. The IMO rule requires ships to lower their fuel sulphur content to no more than 0.5 percent, from 3.5 percent currently.
All product categories showed gains in stockpiles over the past week, bringing the total up 10 percent to 25.140 million barrels, the highest since 29th April this year.
Light distillates emerge as biggest player
The biggest increase came from light distillates, which climbed 11 percent 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 percent 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.
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