Stockpiles of oil products at the UAE’s Port of Fujairah jumped 10% to an eight-month high in the week ended March 18, with regional demand for some products typically slowing during Ramadan observations, according to the Fujairah Oil Industry Zone and historical data.
Total inventories increased to 20.049 million barrels as of March 18, the highest since July 10, the FOIZ data published March 20 showed. Stockpiles have increased 16% since the end of 2023.
Stocks of heavy distillates used as fuel oil for power generation and shipping gained 11% to reach a three-month high of 10.642 million barrels. Light distillates such as gasoline and naphtha increased 6.3% to a two-week high of 7.530 million barrels. Middle distillates, including jet fuel and diesel, jumped 25% to 1.877 million barrels, the most in four weeks.
Ramadan trend
Stockpiles climbed during six of the past seven Ramadan periods, with 2022 being the only exception when the pandemic was widespread, FOIZ data compiled by S&P Global Commodity Insights since 2017 showed.
“Jet fuel demand will definitely be subdued during Ramadan, and [that of] gasoline will be subdued a little bit,” said Dong Wang, Middle East oil markets’ senior analyst at S&P Global.
“These two will surge at the end of Ramadan during the Eid holiday. Gasoil and fuel oil won’t be so much impacted,” Wang added.
Middle East refineries are in the midst of record crude processing, exceeding 9 million b/d for the first time in the first quarter, according to S&P Global. It estimated Middle East refineries will process an average of 9.056 million b/d of crude and other feedstocks in the first quarter, up from 8.88 million b/d in the last three months of 2023. Refinery production for Q1 was estimated at 8.86 million b/d.
Exports of products except for fuel oil climbed to 4.988 million barrels in the week started March 11 from 3.661 million barrels a week earlier, according to S&P Global Commodities at Sea data. Fuel oil shipments in the latest week came to 831,000 barrels — split between Djibouti and Pakistan — compared with 446,000 barrels a week earlier.
So far since the end of 2023, stocks of light distillates have climbed 61%, heavy distillates have increased 4.9% and middle distillates have dropped 25%.
Ample stockpiles in both the low and high sulfur fuel oil segments around Fujairah port are expected to weigh on downstream premiums in the near term, local traders said.
Moreover, the recently leaner LSFO demand in the downstream markets slowed inventory draws too, compared to much firmer demand earlier in March, which previously tightened barge availabilities for prompt refueling schedules, according to bunker suppliers.
“Demand [for LSFO] has been good, but has gone quieter in the past few days. So, [refueling] for later dates is okay, but some players are still tight for prompt,” a Fujairah-based bunker supplier said March 20.
The Platts Fujairah-delivered marine fuel 0.5% sulfur bunker premium over benchmark FOB Singapore marine fuel 0.5%S cargo values slipped to a near three-week low of $13.42/mt March 19, $1.11/mt lower on the day, S&P Global data showed.
In the HSFO market, elevated stockpiles capped any significant upside for delivered premiums, despite decent spot demand and volumes of term contract nominations, traders said.
“HSFO cargo availabilities are fine,” a second trader said.
Some sellers were also eagerly offering out lots for early refueling dates to fill prompt slots, amid healthy barging schedules within two- to six-day lead times, according to traders.
“Backlogs are cleared and many vessels faced delays due to bad weather issues. Such delays can slow [bunker] demand here,” a Fujairah-based trader said March 20, noting that bunkering operations faced intermittent disruptions earlier in February and H1 March due to inclement weather events.
The Platts-assessed Fujairah-delivered 380 CST HSFO bunker premium over the FO 380 CST 3.5% FOB Arab Gulf cargo fell to average $17.66/mt March 1-19, below the $22.99/mt for the whole of February, according to S&P Global data.
