- Heavy distillates and residues jumped 9% to 14.486 million barrels highest since February.
- Total stockpiles of oil products came to 22.897 million barrels, a four-week high.
- Crude oil prices are in contango, with prices higher the later the date.
- Middle distillates stockpiles jumped 24% to 2.304 million barrels after falling 39%.
- The availability of free-market incremental crude oil storage in Fujairah is limited.
- Light distillate stocks rose 2% on the week to 6.107 million barrels after falling 15%.
According to an article published in Platts, oil product stockpiles in the Middle Eastern hub of Fujairah climbed 8.1% during March 23-30.
Bunker fuel inventories on a high
According to data released from the Fujairah Oil Industry Zone, bunker fuel inventories have jumped to a five-week high.
Heavy distillates and residues, which include fuel used by shippers and for power generation, jumped 9% to 14.486 million barrels. This was highest since the week to February 24, when the stockpiles were at 15.167 million barrels, according to the data compiled by S&P Global Platts.
Total stockpiles of oil products as of Monday came to 22.897 million barrels, a four-week high.
Marine and other heavy fuel inventories were still below the record 15.425 million reached in November 2019, even as the coronavirus pandemic has sapped global economic growth this year. Now that container shippers are ready to renew contracts for marine fuel, the heavy fuel stockpiles are likely to soar, according to Apurva Mali, sales manager at Masc Co DMCC, a Dubai-based broker in bunker fuels.
“The container industry has not been showing any obvious signs yet of a global trade slowdown, but they were fulfilling earlier contracts booked before the coronavirus took full effect,“ Mali said. “Now that the supply chain has been disrupted and there is reduced demand for finished goods, which container ships carry, there will, of course, be a reduction in shipping which will then lead to a reduction in demand of bunker fuel that is purchased in Fujairah.“
Traders on the lookout for storage spaces
With demand slowing because of the coronavirus, traders will be looking for storage space to hold products for later usage when demand is back. Crude oil prices are already in contango, with prices higher the later the date.
“Tankage in Fujairah obviously has become a lot more valuable in terms of what is available to store. I think that over the past week it has been filling up with products. I think the real weak spot right now in the market is the availability of crude oil storage,“ Chris Bake, member of the executive committee at Vitol Group said Wednesday at a Gulf Intelligence event.
He added, “Unfortunately the availability of free-market incremental crude oil storage in Fujairah is limited, but we will see all available storage full if it is not already full in the next week to 10 days.“
Jump in stockpiles
Middle distillates stockpiles jumped 24% to 2.304 million barrels after falling 39% in the week earlier. Middle distillates include jet fuel, kerosene, gas oil, diesel and marine bunker gasoil.
“Right now, global trade is not moving the way it normally does because of the lockdown, because of restrictions, because of people not moving, because people are not driving enough, they’re not consuming enough,“ Mali said.
Spot gasoil volumes
Spot gasoil volumes were seen in the Arab Gulf with Kuwait Petroleum Corp. awarding its second gasoil tender for April loading at a discount to the Mean of Platts Arab Gulf gasoil assessments, FOB, according to a Platts report Wednesday. The refiner previously sold a similar gasoil cargo for loading over April 15-16 at a premium.
A rise in light distillate stocks
Light distillate stocks rose 2% on the week to 6.107 million barrels after falling 15% in the week earlier. “A weak global oil complex and tepid demand for gasoline continued to exert downward pressure on the East of Suez gasoline market,“ Platts said in the report Wednesday.
Light distillates also include gasoline blending products such as reformate and alkylate, and naphtha and other light petrochemical feedstocks and condensates that are stored in white product tanks.
Platts holds exclusive rights to publish Fujairah oil products inventory data and has deployed a blockchain network for its collation.
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