Stockpiles of oil products at the UAE’s Port of Fujairah fell to a near two-year low, returning to levels prior to the COVID-19 pandemic for the first time, helped by increased demand for fuel oils for power generation and shipping that has pushed up prices.
The stockpiles were at 17.68 million barrels as of Aug. 30, down 3.3% from a week earlier and the lowest since Sept. 9, 2019, according to the Fujairah Oil Industry Zone data provided exclusively to S&P Global Platts on Sept 1. Heavy distillates, or fuel oils, dropped 5.1% on the week to 8.245 million barrels, the lowest since March 29. Heavy distillates dropped for the third straight week as of Aug. 30 and were down sharply by 46.8% compared with a year earlier.
An uptick in cargo throughput and vessel activity has fueled shipping activity in the Middle East, with Oman’s Sohar Port and Freezone the latest entrants in bunkering by mid-September. The increased demand and tight barge availability were reflected in rising prices at Fujairah, with the Fujairah-delivered 380 CST HSFO assessments up 11% since Aug. 19 at $445/mt as of Aug. 31, and the highest since September 2019, according to Platts data.
“Fujairah is seeing growing shipping demand for HSFO, while China’s independents are buying HSFO to use as an alternative refining feedstock, due to lack of crude import quotas,” Manish Sejwal, Asia oil markets analyst at S&P Global Platts Analytics, said. “There is also robust power generation demand in the Middle East so far, leading to increased demand for fuel oils,” he said.
Total inventories being lowest since Sept. 9, 2019, showed “tightened balance of fuel oil due to a combination of reduced supply and surging demand,” Sejwal said.
Middle distillates including jet fuel and diesel declined 7.2% on the week to 3.675 million barrels as of Aug. 30, the lowest in three weeks. Light distillates including gasoline and naphtha rose for a fourth consecutive week, climbing 2.3% to a five-week high of 5.762 million barrels.
Total stockpiles fell 33.7% over the past year as of Aug. 30, with light distillates down 18.4% and middle distillates off by 11.1%, the data showed.
Source: Hellenic Shipping