Heavy distillates drop 17% on week
Middle distillates highest since Feb 2021
Fuel oils head for Saudi Arabia, Bahrain refineries
Stockpiles of oil products at the UAE's Port of Fujairah dropped for the first time in three weeks in the seven days ended May 22 as exports for fuel oils used in power generation and shipping picked up, according to the latest shipping and port data.
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Total inventories fell 8.2% on the week to 22.851 million barrels as of May 22, after reaching a five-month high a week earlier, according to data from the port's Fujairah Oil Industry Zone provided exclusively to S&P Global Commodity Insights on May 24. Total inventories were up 11% since the end of 2022.
Heavy distillates declined 17% over the week to 11.155 million barrels, the biggest percentage decline this year and the first drop in four weeks. On the upside, middle distillates such as diesel and jet fuel climbed 4% to 4.729 million barrels as of May 22, the highest since February 2021, according to data compiled by S&P Global since 2017. Light distillates including gasoline and naphtha increased 1% to 6.967 million barrels, a two-week high.
Exports of oil products picked up to 3.9 million barrels in the week started May 15 from 3.2 million barrels a week earlier, according to Kpler shipping data. Some 1.95 million barrels of fuel oils were destined for Singapore, after zero deliveries to the city-state for the previous two weeks, the data showed. It was not clear who the buyer is, according to the data.
Saudi Arabia was set to receive 353,000 barrels of fuel oils in the latest week, the most since April. The fuel oil shipments included 198,000 barrels headed for Dubai's fuel retailer and storage company ENOC to the Yanbu refinery in Saudi Arabia, some 154,000 barrels for Saudi Aramco to its Ras Tanura refinery and almost 90,000 barrels for Bahrain to its Sitra refinery, the data showed.
Even with the drop, heavy distillates stockpiles were up 10% so far in 2023. Light distillates declined 6.7% since the end of 2022. while middle distillates ballooned 53% over the same period.
Healthy end-user demand for high sulfur fuel oil bunker and exports have drawn down inventories around Fujairah port, though overall stockpiles remain ample for downstream deliveries, local traders said.
"HSFO bunker demand has been steadier and better than the new lows seen in March," a Fujairah-based trader said May 24.
Fujairah's HSFO bunker sales have since recovered 56.6% month on month and rose 8.9% year on year to total 126,943 cu m across April, following a record low 81,058 cu m in March, the Fujairah Oil Industry Zone data showed.
Two shipments totaling 1.72 million barrels, or 270,804 mt, of HSFO was loaded from Fujairah's terminals over May 17-19 and both were scheduled to arrive at the port of Singapore between June 1 and June 3, latest Kpler shipping data showed.
However, market participants polled by S&P Global also noted that the Middle Eastern fuel oil market has yet to see any substantial support from power utility demand, which typically ramp up during the summer season.
"Premiums should strengthen during the summer months as fuels are diverted for domestic power generation... But, we have yet to see it so far," the trader also said.
The Platts Fujairah-delivered 380 CST high sulfur fuel oil bunker premium over the FO 380 CST 3.5% FOB Arab Gulf cargo assessments averaged $35.15/mt May 2-23, up from $28.81/mt for all of April, S&P Global data showed.
Demand in the low sulfur fuel oil market has remained capped, despite ample upstream inventories, traders said.
"There's no improvement in [LSFO] demand recently. Issues with war insurance and disruptions to trade flows are still the overarching factors affecting bunker demand," a Fujairah-based bunker supplier said May 24.
Compared with the overall availability of barge schedules at Fujairah port for prompt HSFO bunker deliveries since the week of May 22, LSFO lead times were relatively shorter with ample refueling slots within 3-5 days out, local bunker suppliers said.
Platts assessed Fujairah-delivered marine fuel 0.5% sulfur bunker premium over benchmark FOB Singapore marine fuel 0.5% sulfur cargo values at an average of $8.09/mt over May 2-23 from $11.34/mt for April, S&P Global data also showed.