FUJAIRAH DATA: Oil product stocks fall to four-week low

Stockpiles of oil products at the UAE's Port of Fujairah fell by 9.2% in the week ended Oct. 23 to their lowest level in four weeks, with large drawdowns in residues, according to data from the Fujairah Oil Industry Zone.

Total inventories stood at 16.8 million barrels as of Oct. 23, falling for a second consecutive week and the lowest since Sept. 25, the FOIZ weekly data showed. This compared with 22.5 million barrels on Oct. 24, 2022.

Stocks of residues, like heavy distillates used as fuel oil for power generation and shipping, fell to a seven-week low of 8.8 million barrels in the latest reading.

Middle distillates, such as jet fuel and diesel, rose by 31.1% to 2.1 million barrels after a 35% fall in the previous week. Light distillates increased by 6.6% to 5.8 million barrels, the highest in five weeks, according to the FOIZ.

Oil product exports excluding fuel oil from Fujairah averaged 272,400 b/d in the week from Oct. 16, according to S&P Global Commodities at Sea data. Fuel oil exports averaged 264,700 b/d in the latest week, the highest in three weeks.

Heavy distillates stockpiles are down 13% so far in 2023, while light distillates have dropped 22% and middle distillates have declined 31% over the same period.

Bunker selling activity

Competitive selling activity in the low sulfur fuel oil space and moderate demand in the high sulfur fuel oil downstream markets led to reduced stockpiles at Fujairah, traders said.

Bunker demand for HSFO was seen mostly steady, or at least moderate, around Fujairah port, while inventories and barge availability for prompt refueling dates within five days out were still ample for downstream requirements, according to local bunker suppliers.

The Platts Fujairah-delivered 380 CST HSFO bunker premium over the FO 380 CST 3.5% FOB Arab Gulf cargo values averaged at $35.46/mt Oct. 2-24, higher than $12.99/mt for whole of September, S&P Global data showed.

Meanwhile, at least three suppliers were reportedly seen recently offering out LSFO lots at aggressive levels, exerting pressure on delivered bunker premiums amid efforts to move cargoes, traders said.

As LSFO demand at Fujairah has been rather limited, buyers were able to refuel within lead times of four to eight days as barge slots were ample, according to local suppliers.

With the lackluster delivered premiums for LSFO, margins for downstream suppliers have also narrowed. But traders also expect that prices of November's term ex-wharf cargoes could stay buoyed, which is not moving in tandem with the much-weaker downstream valuations.

The Platts-assessed Fujairah-delivered marine fuel 0.5% sulfur bunker premium over the benchmark FOB Singapore marine fuel 0.5% sulfur cargo values rose to average $3.92/mt Oct. 23-25, from 53 cents/mt across the week prior, according to S&P Global data

Most recently, this Fujairah's bunker price differential also flipped into a small discount of 52 cents/mt Oct. 19, before rising to $3.72/mt Oct. 24.