Oil product stockpiles at the UAE’s Port of Fujairah retreated to a five-week low as heavy distillates slumped the most in more than three years, according to Dec. 8 data from the Fujairah Oil Industry Zone provided exclusively to S&P Global Platts, says an article published in Platts.
Power generation dropped
Total inventories stood at 15.77 million barrels as of Dec. 6, down 12.9% from a week earlier and the lowest since Nov. 1, the data showed. Heavy distillates used for marine bunkers and power generation dropped 24% over the same period, the biggest drop since February 2018, according to the data, compiled by Platts since January 2017. Heavy distillates stocks dropped to 9.025 million barrels as of Dec. 6, also the lowest since Nov 1.
Shipping demand for bunker fuels has increased, especially for the low sulfur variety, while costs are going up, traders said. Demand is especially acute for immediate supplies, limiting the availability of barges and that tightness is expected to last until mid-December, industry sources said.
Bunker fuel supplies
One trader noted rising costs and reduced supplies of blending components used to produce low sulfur fuel oil.
“This has pushed up both the premiums of ex-wharf cargoes and delivered marine fuel 0.5%S,” a Fujairah-based bunker supplier said.
Premiums of Fujairah-delivered marine fuel 0.5%S against the benchmark Singapore marine fuel 0.5%S cargo assessments averaged $16.95/mt this month through Dec. 8, up from November’s average of $16.56/mt, Platts data show.
The trader wouldn’t say which blending components were in short supply. In Singapore, LSFO is produced using vacuum gasoil, fuel oil from Brazil, or low sulfur Skikda barrels from Algeria.
Despite the drop in inventories, bunker fuel supplies are considered sufficient, traders said. Supplies of high sulfur fuel oil have remained stable, they said.
“Barges are fully committed at the moment, while bunker supply is generally balanced against demand,” the Fujairah-based bunker supplier also said.
Middle distillates jumped 25% week on week to 2.348 million barrels as of Dec. 6, a two-week high, according to the FOIZ data. Light distillates advanced 2.1% to 4.397 million barrels, a three-week high. Total inventories are down 23.4% since this time last year, with middle distillates dropping 56.32%. Light distillates have slipped 33.39% over the same period while heavy distillates are up 4.76%.
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Source: Platts
