FUJAIRAH, 1st April, 2020 (WAM/S&P Platts) — Oil product stockpiles in the Middle Eastern hub of Fujairah climbed 8.1 percent over the week of 23rd to 30th March, with bunker fuel inventories jumping to a five-week high, according to data released Wednesday from the Fujairah Oil Industry Zone, FOIZ.
Heavy distillates and residues, which include fuel used by shippers and for power generation, jumped nine percent to 14.486 million barrels. This was highest since the week ending 24th February, when the stockpiles were at 15.167 million barrels, according to the data compiled by S&P Global Platts.
Total stockpiles of oil products as of Monday came to 22.897 million barrels, a four-week high.
Marine and other heavy fuel inventories were still below the record 15.425 million reached in November 2019, even as the coronavirus pandemic has sapped global economic growth this year. Now that container shippers are ready to renew contracts for marine fuel, the heavy fuel stockpiles are likely to soar, according to Apurva Mali, sales manager at Masc Co. DMCC, a Dubai-based broker in bunker fuels.
“The container industry has not been showing any obvious signs yet of a global trade slowdown, but they were fulfilling earlier contracts booked before the coronavirus took full effect,” Mali said.
“Now that the supply chain has been disrupted and there is reduced demand for finished goods, which container ships carry, there will, of course, be a reduction in shipping which will then lead to a reduction in demand of bunker fuel that is purchased in Fujairah.”
With demand slowing because of the coronavirus, traders will be looking for storage space to hold products for later usage when demand is back. Crude oil prices are already in contango, with prices higher the later the date.
“Tankage in Fujairah obviously has become a lot more valuable in terms of what is available to store. I think that over the past week it has been filling up with products. I think the real weak spot right now in the market is the availability of crude oil storage,” Chris Bake, member of the executive committee at Vitol Group said Wednesday at a Gulf Intelligence event.
“Unfortunately, the availability of free market incremental crude oil storage in Fujairah is limited, but we will see all available storage full, if it is not already full, in the next week to ten days.”
Middle distillates stockpiles jumped 24 percent to 2.304 million barrels after falling 39 percent in the week earlier. Middle distillates include jet fuel, kerosene, gasoil, diesel and marine bunker gasoil.
“Right now, global trade is not moving the way it normally does because of the lockdown, because of restrictions, because of people not moving, because people are not driving enough, they’re not consuming enough,” Mali said.
Spot gasoil volumes were seen in the Gulf with Kuwait Petroleum Corp. awarding its second gasoil tender for April loading at a discount to the Mean of Platts Arab Gulf gasoil assessments, FOB, according to a Platts report Wednesday. The refiner previously sold a similar gasoil cargo for loading over 15th and 16th April at a premium.
Light distillate stocks rose two percent on the week to 6.107 million barrels after falling 15 percent in the week earlier. “A weak global oil complex and tepid demand for gasoline continued to exert downward pressure on the East of Suez gasoline market,” Platts said in its Wednesday report.
Light distillates also include gasoline blending products, such as reformate and alkylate, and naphtha and other light petrochemical feedstocks and condensates that are stored in white product tanks.
Platts holds exclusive rights to publish Fujairah oil products inventory data, and has deployed a blockchain network for its collation.
