Stockpiles of oil products at the UAE’s Port of Fujairah fell for the first time in three weeks as of June 10, driven by a significant decrease in heavy distillates used for power generation and ship bunkering. According to the Fujairah Oil Industry Zone (FOIZ) data, total inventories dropped by 3.9% to 20.731 million barrels, reaching a two-week low.
Decline in Heavy, Middle, and Light Distillates
Heavy distillate inventories experienced a sharp decline of 5.9%, reaching a three-week low of 10.068 million barrels. Middle distillates, including diesel and jet fuel, fell by 5.3% to a two-week low of 3.526 million barrels. Light distillates such as gasoline and naphtha saw a marginal decrease of 0.1% to 7.137 million barrels. Despite these weekly drops, overall stockpiles have increased by 20% since the end of 2023.
Rising Demand for Ship Fuels
Demand for low-sulfur ship fuel (LSFO) has been increasing, while high-sulfur fuel oil (HSFO) demand remains strong. The premium for Fujairah-delivered marine fuel 0.5% sulfur over Singapore cargo reached a three-month high of $13.19/mt on June 7. However, it averaged $11.17/mt in June, slightly higher than May’s average of $10.23/mt. HSFO demand is expected to stay robust as more ships call at Fujairah for bunkering due to disruptions in the Red Sea.
Fuel Oil Exports Surge
Fuel oil exports from Fujairah surged to 2.68 million barrels in the week starting June 3, up from 1.42 million barrels the previous week, marking the highest volume in four weeks. Singapore was the primary destination, receiving nearly 2.1 million barrels. Despite the seasonal increase in demand for fuel oil for power generation in the Middle East during summer, this year’s uptick has yet to materialize.
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Source: S&P Global
