Refined oil product stocks at the Middle Eastern hub of Fujairah climbed 7.1% in the week, led by gains in heavy distillates and residues amid expectations of increased shipper demand for low sulfur fuel oil, reports S&P Global Platts.
The information was compiled according to the data released by the Fujairah Oil Industry Zone.
Distillates rising a two week high
Total stocks on September 30 stood at 20.11 million barrels, a seven-week high.
Heavy distillates and residues, including fuel oils used for marine bunkers and power generation, climbed 10% to 11.362 million barrels, a two-week high.
Commercial onshore residue stocks in Singapore also rebounded week on week over September 19-25 after three straight weeks of declines, according to the latest data released last week by Enterprise Singapore.
IMO regulations put a demand for compliant fuels
Market participants have been increasingly storing more low sulfur fuel oil amid expectations of growing demand for the grade, especially in the fourth quarter, S&P Global Platts reported in a separate report.
The International Maritime Organization will cap sulfur content in marine fuels at 0.5% from January 1, down from 3.5% now.
Shipowners will have to either burn cleaner, more expensive fuels or install scrubbers if they continue to burn high sulfur fuel oil, to comply with the rule.
Light and Middle distillates scenario
Platts assessed Singapore-delivered 380 CST bunker fuel at $400/mt on Tuesday, while Fujairah-delivered 380 CST bunker fuel was assessed at $380.80/mt.
Inventories of light distillates including gasoline rose 8% to 6.588 million barrels during the period, a six-week high.
Meanwhile, middle distillates, such as gasoil, diesel, marine gasoil, jet fuel and kerosene, dropped 7% to 2.16 million barrels, a two-week low.
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Source: S&P Global Platts
