FUJAIRAH DATA: Oil product stockpiles extend gains to five-month high

Stockpiles of oil products at the UAE's Port of Fujairah climbed for a second consecutive week to a five-month high as of May 15, led by a 35% surge in jet fuel, diesel and other middle distillates, according to May 17 data from the Fujairah Oil Industry Zone.

Total inventories climbed 7.5% on the week to 24.9 million barrels, the highest since Nov. 21, the FOIZ data provided exclusively to S&P Global Commodity Insights showed. Total inventories are now up 20% since the end of 2022.

Exports of oil products from Fujairah slowed to 2.29 million barrels in the week that began May 8, the lowest since March 2022, with the four-week moving average at a two-month low, according to preliminary Kpler shipping data.

Stockpiles of middle distillates such as diesel and jet fuel climbed to 4.559 million barrels as of May 15, the highest since Sept. 26.

Stocks of light distillates such as gasoline and naphtha dropped 14% over the week to 6.884 million barrels, a two-week low. Heavy distillates used as fuel for power generation and as ship fuel expanded 14% to 13.457 million barrels, also a five-month high.

Heavy distillates are now up 33% so far in 2023, while light distillates have declined 7.8% and middle distillates have ballooned 48% over the same period.

LSFO demand capped, buoys stocks

Lean bunker demand in the low sulfur fuel oil segment and rising imports were seen largely contributing to the stock build, while high sulfur fuel oil inventories also remain ample for downstream deliveries, according to Fujairah-based traders May 17.

As overall requirements of International Maritime Organization-compliant bunker fuel stayed largely capped, sellers reportedly "lost inquiries" to competitors offering more aggressively despite already offering lower, according to a Fujairah-based trader.

"There was some desperate selling [activity] in the past week, given the low [LSFO] demand," a Fujairah-based bunker supplier said.

The Platts Fujairah-delivered marine fuel 0.5% sulfur bunker premium over the benchmark FOB Singapore marine fuel 0.5% sulfur cargo value slipped to average $8.36/mt over May 2-16 from $11.34/mt for all of April, S&P Global data showed.

"Compared to [the sluggish] demand, there is substantial oil here around Fujairah, in fact there's plenty of it," the bunker supplier added.

A cargo, comprising 450,332 barrels, or 70,918 mt, of LSFO sourced from Kuwait's Al-Zour refinery was discharged at Fujairah port most recently on May 11, on the back of a record 665,210-barrel LSFO cargo, or 104,758 mt, from the same origin that was unloaded at Fujairah on May 3, according to data by Kpler.

"Numerous macro factors are at play, such as weaker tanker rates, fewer cargoes to move, and recession fears clouding the market," another Fujairah-based trader said citing possible downside risks to bunker demand in the near term.

The demand for high sulfur fuel oil in Fujairah is better than that for LSFO, with the market retaining some support for bunker premiums, local traders said.

Competitive bids for May's supply of term ex-wharf 380 CST HSFO cargoes were met with resistance due to heathy demand in the end-user market, though the ample inventories could potentially cap significant upsides to delivered premiums, according to bunker suppliers.

The Platts Fujairah-delivered 380 CST high sulfur fuel oil bunker premium over the FO 380 CST 3.5% FOB Arab Gulf cargo assessments rose to average $35.24/mt over May 2-16 from $28.81/mt across April, S&P Global data showed.