Oil products stocks at the UAE’s eastern port of Fujairah fell slightly in the week of Aug. 15, as logjams at the world’s third biggest bunkering hub eased following supply disruptions caused by heavy rain and flooding towards end-July.
Total oil product inventories fell 1.4% to 23.770 million barrels on the week, according to data from the Fujairah Oil Industry Zone provided exclusively to S&P Global Commodity Insights on Aug. 17. This is the highest level of stocks since May 3, 2021.
Stocks had soared to a 20-month high in the week to Aug. 8 as supply disruptions at the port continued into August.
The drop in oil stocks in the week to Aug. 15 was led by a 19.5% fall in middle distillates, including diesel and jet fuel, to 2.928 million barrels.
The Asian gasoil complex continues to be weighed down by supply-side pressure, with fresh sell-side tender activity keeping sentiment in the market bearish in the short term.
Meanwhile, in fresh tender activity, QatarEnergy has issued a tender offering a 36,000 mt cargo of 5 ppm sulfur gas-to-liquids diesel for Sept. 13-14 loading from Ras Laffan, Qatar, according to market sources. The tender closes Aug. 17, with next-day validity.
Bunkering activity
Heavy residues and distillates, including fuel oil and marine fuel, fell 4.8% to 12.239 million barrels, but were still above the 12 million-barrel level for the seventh week in a row.
Bunkering activity at the port is gradually picking up after the disruptions seen earlier in August.
Bunker fuel sales at Fujairah gained 2.7% on the month to 669,992 cu m in July, but were down 2.9% from a year ago, according to Fujairah Oil Industry Zone data.
Refueling operations for bunker barges were mostly hampered between late-July and early-August as upstream cargo suppliers ceased terminal operations, thus limiting product availabilities for downstream bunker deliveries, sources told S&P Global.
Inventory drawdowns of residual fuel stocks were aligned with expectations as downstream bunker suppliers rushed to clear the substantial backlog of orders that accumulated amid stoppages in terminal operations due to the floods, traders said.
Slower demand
The Platts Fujairah-delivered marine fuel 0.5%S bunker premiums over the benchmark FOB Singapore Marine Fuel 0.5%S cargo assessments gradually softened to average $93.58/mt Aug. 15-16, compared to $101.81/mt during the week prior, according to S&P Global data.
Despite the adequate supplies of high sulfur fuel oil, bunker suppliers expect slower demand as operational bottlenecks ease gradually in the coming days.
Healthy inventory levels lowered the Platts Fujairah-delivered 380 CST HSFO bunker premiums over the FO 380 CST 3.5% FOB Arab Gulf cargo assessments to average $32.43/mt Aug. 1-16 from $56.50/mt in July, S&P Global data showed.
“We opted to refuel at Jebel Ali since late-July due to the floods, even though bunker prices are more expensive compared to Fujairah and Khor Fakkan ports,” a source from a shipping company said Aug. 17.
Fujairah’s light distillates, including gasoline and naphtha, rose 12.9% to 8.603 million barrels, to the highest level since June 17, 2019.
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Source: Spglobal
