- No signs of middle distillates heading to Europe
- Heavy distillates rise 10% on the week
- LSFO Fujairah fuel premium over Singapore widens
Oil product stockpiles at the Port of Fujairah on the UAE’s East Coast fell for a second week, with gasoil and other middle distillates declining the most on record to an all-time low, reports Platts.
Oil inventory stands low
The total inventory stood at 17.725 million barrels as of March 7, down 6.8% from a week earlier and the lowest since the record low of 14.266 million barrels on Feb. 14, showed data released March 9 by the Fujairah Oil Industry Zone. Middle distillates stocks fell a record 55% on the week to 1.103 million barrels, the lowest since the port began sharing data with S&P Global Commodity Insights in January 2017.
Middle distillates exports from Fujairah were at 53,400 b/d in February, down from 58,100 b/d in January, according to Kpler data. Destinations include Tanzania, Yemen, Mozambique, Jordan and Sri Lanka. There are no signs of supplies shifting to Europe as an alternative to Russia, a source said.
“Russia was an important diesel supplier to Europe. With Europe buyers avoiding Russia barrels, they have to draw from somewhere else, and Fujairah is one alternative,” another source said. “Gasoil inventories at Fujairah were already low.”
Stockpiles of light distillates, including gasoline and naphtha, stood at 5.834 million barrels as of March 7, down 14% from a week earlier and the lowest in three weeks.
Stocks of heavy distillates used as fuel for marine bunkering and for power generation rose 10% to 10.788 million barrels over the same period, a four-week high. Fujairah is the world’s third-largest bunkering hub.
Surging crude oil prices
Marine bunker buyers are keeping purchases to a minimum because of surging crude oil prices weighing on demand for all fuel grades, market sources said. HSFO supplies within the Middle East are keeping Fujairah marine fuel inventories ample, they said.
The premiums of Fujairah-delivered 380 CST high sulfur fuel oil to the FOB Arab Gulf 180 CST HSFO cargo assessments averaged $13.34/mt over March 1-8, below the average of $19.31/mt in February, according to data from S&P Global.
For LSFO, however, dwindling stockpiles and a lack of blending components have supported premiums, leading to a slowdown in demand, according to market sources.
Decline in middle distillates
“Local suppliers procure low sulfur fuel oil components from the Black Sea refineries, so sanctions imposed on Russia could reduce feedstock availability for the [LSFO] blending pool,” a bunker supplier said. Strengthening tanker charter rates may discourage imports, the supplier said.
The premiums of Fujairah-delivered marine fuel 0.5% against the benchmark FOB Singapore marine fuel 0.5%S cargo assessments averaged $36.68/mt over March 1-8, $10.71/mt above the average in February.
Total inventories are down 14.9% from this time last year, led by a 73.2% decline in middle distillates. Light distillates have declined 18.3% while heavy distillates have risen 12.7%.
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