Fujairah Oil Inventories Hit Two-Month High with Fifth Weekly Gain

By
Mfame Editor
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20

  • Heavy Distillates Lead Stock Build, Light Products Also Rise.
  • Middle Distillate Stocks Fall After Five-Week Climb.
  • Fuel Oil and Gasoline Prices Decline, Jet Fuel and Naphtha Rebound.

Oil product stockpiles at the UAE’s Port of Fujairah have surged to a two-month high as of July 7, marking the fifth week in a row that inventories have increased the longest streak since tracking began in 2017, according to data released by the Fujairah Oil Industry Zone on July 9. Overall inventories jumped by 8% week-on-week, reaching 20.685 million barrels, reports S&P Global.

Heavy and Light Distillates Fuel Inventory Growth

  1. Heavy Distillates: Stocks used for fuel oil in power generation and shipping rose 15% to 10.255 million barrels, the highest level in two weeks.
  2. Light Distillates: This category, which includes gasoline and naphtha, climbed by 8.5% to 8.124 million barrels — the highest it’s been in seven weeks.
  3. Middle Distillates: On the other hand, jet fuel and diesel stocks fell by 15% to 2.306 million barrels, marking the first weekly decline in five weeks after reaching a three-month peak.

Fuel Prices Remain Under Pressure

Ship Fuels: 0.5% sulfur fuel delivered in Fujairah was priced at $517/mt on July 8, down from $555/mt on June 19. High-sulfur fuel oil (HSFO) dropped to $408/mt from $465/mt over the same period.

Other Product Prices:

  1. Unleaded Gasoline 92 RON FOB Jebel Ali: $75.17/b on July 8, down from $83.39/b on June 20.
  2. Naphtha FOB Arab Gulf: $549.56/mt, up from $519.42/mt on June 27.
  3. Jet Fuel FOB Arab Gulf: $83.34/b, up from $79.59/b on June 24.
  4. Gasoil FOB Arab Gulf: $86.86/b, up from $82.27/b on June 24.

Recent Surge in Product Exports

Fuel Oil Exports to Egypt: In July, we saw an impressive average of 147,000 barrels per day (b/d), marking the highest level since at least 2016.

Naphtha Shipments: There was a significant jump to 191,000 b/d, up from just 62,000 b/d in June, with destinations including Japan, India, Singapore, and Thailand.

Year-to-Date Stockpile Growth

Since the end of 2024, we’ve experienced notable growth in stockpiles:

  1. Total Inventories: Increased by 33%.
  2. Heavy Distillates: Up by 37%.
  3. Light Distillates: Rose by 34%.
  4. Middle Distillates: Gained 17%.

Market Dynamics and Downstream Impact

Although supply is adequate, demand for low-sulfur fuel oil in regional downstream markets has been limited, keeping premiums and profit margins quite tight. A recent Suezmax-sized LSFO cargo from Kuwait helped to replenish inventories in early July, ensuring stock levels remain sufficient.

Traders have observed that ex-wharf valuations for July-loading contracts have held steady at high single-digit premiums, which is putting pressure on margins for downstream players who depend on monthly cargo deliveries.

HSFO Market Sees Balanced Supply and Rising Demand

The high-sulfur fuel oil supply has found a better balance, thanks to strong demand from Egypt’s utility sector. This has resulted in a “marked improvement” in both delivered and ex-wharf differentials. However, traders are cautious, noting that fierce competition in the downstream sector could cap any price increases.

Even during the peak summer demand period for power generation in the Middle East, HSFO prices haven’t seen much support, as sellers continue to focus on prompt delivery amid healthy stock levels.

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Source: S&P Global