Oil Stocks Rise To A Two-year High

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  • Heavy distillates almost double in past year
  • Fujairah bunker prices have been slipping
  • Total inventories head for record annual gain

A recent news article published in the Platts states that oil products stocks jump to two year high.

Oil products stockpiles at the UAE’s Port of Fujairah

Oil products stockpiles at the UAE’s Port of Fujairah climbed to a two-year high Nov. 7, with light, middle and heavy distillates all posting double-digit percentage gains from a week earlier and setting the stage for the biggest annual gain on record, according to Fujairah Oil Industry Zone data published Nov. 9.

The total inventory was 25.16 million barrels, up 14.6% from a week earlier and the highest since Aug. 24, 2020, the data provided exclusively to S&P Global Commodity Insights showed. The record is 30.71 million barrels set June 1, 2020. The total is up 57% year to date, heading for the biggest annual gain since S&P Global began compiling the data in 2017.

Stockpiles of heavy distillates used as fuel for power generation and marine bunkers jumped 13% over the latest week to 14.602 million barrels as of Nov. 7, the most since May 31, 2021. The record for heavy distillates is 17.168 million barrels, set June 8, 2020. Platts-assessed Fujairah-delivered marine fuel bunker with 0.5% sulfur has dropped 8.7% since Oct. 10 to $682/mt on Nov. 8, according to S&P Global data.

Stockpiles of middle distillates jumped 23% over the latest week to 3.307 million barrels as of Nov. 7, a four-week high, while light distillates expanded 14% to 7.251 million barrels, the highest in two weeks.

Exports of oil products from Fujairah have slowed, with shipments averaging 612,000 b/d in October, down from 740,000 b/d in September and the lowest since May, according to Kpler shipping data. Outbound shipments of fuel oils dropped to 292,000 b/d in October, the lowest since January, while light distillates increased to 261,000 b/d, the most since August 2020, the Kpler data showed. Shipments of petrochemicals feedstock naphtha averaged a record 142,000 b/d in October, with Oman set to get 6,100 b/d for the month, the most since January 2021.

Sluggish demand for bunker fuels at Fujairah has led to increases in both low and high sulfur fuel oil stockpiles, market sources said.

“Demand [for low sulfur fuel oil bunkers] has been very slow and the market is competitive. Slim demand was seen across October, while the pattern is more or less similar so far in November,” a Fujairah-based trader said Nov. 8.

With “wafer thin” demand for the International Maritime Organization-compliant bunker fuel, intensifying competition among suppliers has gradually chipped away at bunker premiums over Singapore — the top bunker market.

The Platts Fujairah-delivered marine fuel 0.5%S bunker premium over the FOB Singapore Marine Fuel 0.5%S cargo assessments averaged $10.33/mt Nov. 1-8, down from $15.96/mt in October, S&P Global data showed.

Fujairah’s LSFO bunker premium slips

Fujairah’s LSFO bunker premium slipped to $7.61/mt on Nov. 8, the lowest since Oct. 14, 2021, S&P Global data showed.

“Traders who imported LSFO earlier are now desperate to sell,” a Fujairah bunker supplier said. “Refiners and producers are also following, so this hurts the market.”

In a bid to reduce HSFO stockpiles, traders have become more competitive in recent days, offering delivered supplies below the market, market sources said.

An influx of Russian-origin cargoes into the HSFO stockpiles probably was sold below the market, allowing traders to undercut the competition, Fujairah-based traders said.

Inquiries to secure HSFO fixtures

“There is plenty of availability … I couldn’t get firm inquiries to secure HSFO fixtures for the past two days,” one trader said.

As inventories have climbed, the Fujairah-delivered 380 CST high sulfur fuel oil bunker premium over the FO 380 CST 3.5% FOB Arab Gulf cargo assessments slipped to average $26.09/mt Nov. 1-8 from $46.30/mt in October, and most recently was $13.30/mt on Nov. 8, the lowest since March 5, 2021, according to S&P Global data.

Heavy distillates stocks have ballooned 97.69% in the past year, while the total is up 61.45% over the same period. Light distillates are up 47.4% on the year and middle distillates are 0.8% larger.

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Source: Platts

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