- Inventories at one-month low but 41% higher than end-2021
- Light distillates plunge 15.6% to lowest since July 11
- Lackluster LSFO demand at Fujairah depresses prices
Oil product stocks drop 10.4% led by light distillates plunge, states a Platts news source.
Oil product stockpiles at the UAE’s Port of Fujairah
Oil product stockpiles at the UAE’s Port of Fujairah fell 10.4% in the week ended Nov. 28, led by a plunge in light distillates stocks, according to Fujairah Oil Industry Zone data published Nov. 30.
Total inventories were at 22.516 million barrels as of Nov. 28, the lowest since Oct. 31, the data provided exclusively to S&P Global Commodities Insights showed. The plunge comes after a 5.4% uptick a week earlier.
Stockpiles of light distillates, such as gasoline and naphtha, plummeted 15.6% to 6.330 million barrels, to the lowest level since July 11.
Demand from naphtha-fed steam crackers in the Asia naphtha market remained weak on poor olefin-naphtha margins, but rising freight rates and anticipation of a shortage in upcoming arbitrage volumes from the West strengthened trading sentiment, market sources said.
There were escalating concerns on Asian supply, with regional availability heard tight going into winter and fewer Russian barrels seen due to sanctions on the country’s cargoes, which accounted for the high front-month spreads, said a market source.
“[Worry over sanctions] is pushing up naphtha, given expectations of lesser Russia volumes coming to the East,” a Southeast Asian trader previously told S&P Global. “First [sanctions] upcoming on Dec. 5 will give people an idea on how impactful February [sanctions] will be for [distillate] products.”
Gasoline weakens
The Asian gasoline complex has softened this week as supply is set to outpace demand on the back of rising Chinese exports, sources said.
Sources told S&P Global that China’s gasoline exports in November are expected to total 2 million mt, up from 1 million mt in October, while gasoline demand is expected to get some support from Australia ahead of the summer driving season.
Additionally, some market participants expected that demand may pick up ahead of the end-of-year festivities.
Stockpiles of heavy distillates and residues in Fujairah, such as fuel oil, fell 8.4% to 13.213 million barrels to the lowest level since Oct. 31.
Platts Singapore-delivered marine fuel 0.5%S bunker price against Fujairah widened to a near six-month high of $28/mt Nov. 28 and widened further to $30/mt Nov. 29, data from S&P Global showed, amid tightened barge availabilities at the world’s largest bunker hub.
Sellers of low-sulfur fuel oil bunkers in Singapore have seen a higher inflow of inquiries in recent weeks, with buyers steadily looking for requirements owing to the softening of international crude oil prices, according to market sources.
Lackluster LSFO prices
On the other hand, lackluster demand at Fujairah has continued to depress LSFO bunker premiums, while upstream inventories remain plentiful, according to local bunker suppliers.
“LSFO inquiries [for December deliveries] are slowly picking up, but delivered prices are still not improving unless suppliers raise the premiums,” a Fujairah-based bunker supplier said Nov. 29.
Meanwhile, the elevated LSFO inventories and below-average demand have led also to intense competition among suppliers to capture the limited inquiries too, sources said.
Platts Fujairah-delivered marine fuel 0.5%S bunker premiums over the FOB Singapore Marine Fuel 0.5%S cargo assessments averaged $10.42/mt over Nov. 1-29, compared with $15.96/mt in October, according to data from S&P Global.
Stockpiles of middle distillates in Fujairah, such as gasoil and jet fuel, dropped 7.5% to 2.973 million barrels, a two-week low.
Total inventories are now 41% higher since the end of 2021, with light distillates leading the way with a 46% jump. Heavy distillates have climbed 39% over the same period and middle distillates are up by 39%.
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Source: Platts
