Petroleum product inventories at the port of Fujairah in the United Arab Emirates hit a two-year high on November 7, with light, medium and heavy distillates all posting double-digit percentage gains from the previous week and opening the the biggest annual gain on record, according to data from the Fujairah Oil Industry Zone released on November 9.
Total inventory was 25.16 million barrels, up 14.6% from the previous week and the highest since Aug. 24, 2020, according to data provided exclusively to S&P Global Commodity Insights. The record is 30.71 million barrels set on 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% in the past week to 14.602 million barrels as of November 7, the most since May 31, 2021. The record heavy distillates is 17.168 million barrels as of June 8, 2020. Marine fuel bunker delivered by Platts to Fujairah with 0.5% sulfur has fallen 8.7% since Oct. 10 to $682/ton on Nov. 8, according to data from S&P Global.
Middle distillate inventories jumped 23% in the past week to 3.307 million barrels as of Nov. 7, a four-week high, while light distillates rose 14% to 7.251 million barrels, the higher in two weeks.
Exports of petroleum products from Fujairah slowed, with shipments averaging 612,000 bpd in October, down from 740,000 bpd in September and the lowest since May, according to shipment data from Kpler. Outbound fuel oil shipments fell to 292,000 bpd in October, the lowest since January, while light distillates rose to 261,000 bpd, the most since August 2020, according to Kpler data. Shipments of petrochemical base naphtha averaged a record 142,000 bpd in October, with Oman expected to reach 6,100 bpd for the month, the most since January 2021.
Weak demand for bunker fuels in Fujairah has led to increased inventories of low and high sulfur fuel oil, market sources said.
“Request [for low sulfur fuel oil bunkers] has been very slow and the market is competitive. Weak demand was seen in October, while the trend is more or less similar so far in November,” a Fujairah-based trader said on November 8.
With “tiny” demand for International Maritime Organization compliant bunker fuel, increased competition among suppliers has gradually reduced bunker premiums in Singapore, the largest bunker market.
The 0.5%S marine fuel bunker premium delivered by Platts Fujairah over FOB Singapore Marine Fuel 0.5%S freight valuations averaged $10.33/ton from Nov 1-8, down from 15 $.96/ton in October, according to data from S&P Global.
Fujairah’s LSFO bunker premium slipped to $7.61/ton on Nov. 8, the lowest since Oct. 14, 2021, according to data from S&P Global.
“Traders who were importing LSFO earlier are now desperate to sell,” said a Fujairah bunker supplier. “Refiners and producers are also following, so it’s hurting the market.”
In a bid to reduce HSFO stocks, traders have become more competitive in recent days, offering below-market deliveries, market sources said.
An influx of Russian-origin shipments into HSFO stocks likely sold below market, allowing traders to undercut competition, Fujairah-based traders said.
“There is a lot of availability…I haven’t been able to get any firm inquiries to secure HSFO fixtures in the past couple of days,” one trader said.
As inventories rose, premium of Fujairah 380 CST High Sulfur Bunker Oil delivered to 380 CST FO 3.5% FOB Arabian Gulf cargo valuations fell to $26.09/t averaged Nov. 1-8, down from $46.30/t in October, and most recently was $13.30/ton on Nov. 8, the lowest since March 5, 2021, according to S&P Global data.
Heavy distillate inventories have soared 97.69% over the past year, while the total has risen 61.45% over the same period. Light distillates are up 47.4% over the year and middle distillates up 0.8%.