Total refined product stocks at the UAE port of Fujairah stood at 15.344 million barrels in the week to January 1, down 9.5% from the previous week and at a seven-week low after a large draw of heavy distillates, according to latest data from the Fujairah Energy Data Committee, or FEDCom.
Stocks of light distillates rose 12.7% week on week to an 11-week high of 5.392 million barrels. Activity in the petrol market was limited over the past week as the year-end holidays led to subdued trading, with some expectations that petrol is on the cusp of a seasonal correction, having been relatively strong in the early part of the winter season, S&P Global Platts Analytics said in a report.
Front-month petrol swaps for both the Singapore and Arab Gulf markets flipped into a contango of minus 18 cents on the first trading day of the year. The Middle East petrol market continues to show healthy demand, but it is increasingly being met by arbitrage barrels coming from the West, sources said.
This could change, after Saudi Arabia, the region's largest market unveiled higher domestic petrol prices - up as much as 127% - effective from January 1. However, the impact on demand is expected to be limited in the near term, Platts Analytics said.
Stocks of middle distillates fell by 29.5% week on week or 556,000 barrels to 1.362 million barrels. Stock levels have remained persistently low since falling below 2 million barrels on November 20, 2017. A cold weather snap has boosted prices and drawn down stocks in Europe, but arbitrage economics to move gasoil West of Suez remain unappealing, the report said.
Heavy distillate and residues stocks also tumbled 16.1% to a seven-week low of 8.626 million barrels. Inventories have fallen around 3.7 million barrels over the past four weeks despite a flat market structure, which may suggest a rebound in the coming weeks, according to Platts Analytics.
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