January 5, 2024 [S&P Global]- Stockpiles of oil products at the UAE’s Port of Fujairah climbed 10% in the week ended Jan. 1, led by a record 55% jump in light distillates such as gasoline and naphtha, according to data from the Fujairah Oil Industry Zone.
The total rose to 19.204 million barrels as of Jan. 1, the highest in 12 weeks, the FOIZ data published Jan. 3 showed. The total stockpile fell 16% on the year in 2023 after climbing 29% in 2022, according to port data provided to S&P Global Commodity Insights since 2017.
For the latest week, light distillates jumped to 7.264 million barrels, the highest since Aug. 14. Middle distillates such as diesel and jet fuel dropped 21% to 1.987 million barrels, an eight-week low. Heavy distillates and residues used for power generation and for shipping declined 1.9% to 9.953 million barrels, the lowest in three weeks.
Demand for low-sulfur fuel oil and aggressive selling in high-sulfur oil for shipping helped to push heavy distillate and residue stockpiles lower, traders said Jan. 3.
Shipowners submitted nominations to reserve barge slots much earlier in advance of forward refueling requirements during the year-end holiday season, where operations might be more congested than usual, local traders said.
Shipping demand
The waiting time for LSFO refueling from barges is expected to range from five to seven days, with limited prompt availabilities for most of January, signaling “healthy” bunker demand for the month, a Fujairah-based trader said. In recent weeks, the wait time has been nine to 10 days.
Platts, part of S&P Global Commodity Insights, assessed the Fujairah-delivered marine fuel 0.5% bunker premium to benchmark FOB Singapore marine fuel 0.5% cargo values at an average of $28.31/mt in December, above the $20.52/mt for all of November. The premium reached $26.13/mt on Jan. 2.
For high sulfur fuel oil, there have been aggressive offers by at least two suppliers, traders said.
The Platts-assessed Fujairah-delivered 380 CST HSFO bunker premium to 380 CST 3.5% FOB Arab Gulf cargoes sank to average $2.61/mt across December from $25.24/mt in November and was last assessed at minus $3.07/mt on Jan. 2, according to data by S&P Global.
The 16% drop in inventories last year was due to backwardation of products in Q3 2023, when stocks fell to a 2023 low of 16 million barrels on Sept. 4, according to Dong Wang, Middle East oil markets senior analyst at S&P Global. Supply was then restrained in Q4 on refinery maintenance in the Middle East along with the unexpected temporary shutdown of Kuwait’s Al-Zour refinery in November, he added. This prevented buildup of stockpiles at Fujairah in Q4, especially fuel oil, he said. Inventories of light distillates fell 37% for the year, middle distillates declined 19% and heavy distillates were up 0.2% since the end of 2022.
Product exports from Fujairah in 2023 dropped to an average 671,000 b/d from 690,000 b/d in 2022, due to a decline in fuel oil shipments, according to S&P Global Commodities at Sea data. Exports of products except for fuel oil rose to a record 459,000 b/d in 2023 from 409,000 b/d in 2022, the data show. Singapore was the largest destination for both fuel oil and other product exports from Fujairah in 2023.
Iraq was the biggest supplier of fuel oil and other products imported into Fujairah in 2023, according to CAS. In terms of fuel oil alone, Russia was the second-biggest source at 55,500 b/d, down from a record 75,600 b/d in 2022 when sanctions were imposed on the country’s oil exports after its invasion of Ukraine. Iraq’s shipments of fuel oil to Fujairah climbed to a record 81,500 b/d last year from 74,400 b/d in 2022.
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