As of Monday, October 29 total oil product stocks in Fujairah stood at 20.626 million barrels – down by 4.6% week on week.
Stocks of light distillates rose by 3.6% week on week to 9.203 million barrels. The lights category set a new record high for a second week in a row. Despite some support from recent declines in crude prices, gasoline markets remain bearish in both the East of West of Suez. Gasoline cracks in the US and Europe remain around the lows for the year, while Singapore gasoline cracks against Dubai are currently at their lowest since November 2013. 'The overall gasoline complex is weak with concerns of oversupply," a gasoline trader said. China recently released an additional 740,000 mt of gasoline export quotas for 2018, which would add further pressure on an already weak market.
Stocks of middle distillates were again little changed week on week, rising by 1% to 4.395 million barrels. Arbitrage of ultra-low sulfur diesel from the Middle East and the west coast of India to Europe looks set to rise with a weaker East-West gasoil exchange for swaps (EFS) see recently. The EFS fell sharply over the past week to an 11-month low of minus $15.72/mt on Tuesday. At such levels arbitrage to move Asian gasoil to Europe becomes viable on paper. 'The east/west spread is a bit more favourable so we could see within three weeks more product coming to Europe,' a trader said. The European gasoil market has been experiencing resurgent strength recently, with demand driven by tightness both on land and along the ARA region.
Stocks of heavy residues fell by 16.1% week on week to 7.028 million barrels – a seven month low. Bunker demand in Fujairah remains firm, supported by lower flat prices on the back of the recent slump in crude. Uncertainty remains on the supply side as buyers reduce their commitments to buy fuel oil from Iran in preparations for US sanctions that come into effect next week.
Fuel oil supply from Iran is expected to decline to below 1 million mt in October from the usual 1.2 million-1.4 million mt a month, market sources said this week. Iran is considered as a supplier of high-quality cutter stocks for bunker fuel as it sells 280 CST straight-run high sulfur fuel oil. Industry sources estimate about 500,000-600,000 mt/month of the Iranian fuel oil goes into the Fujairah bunker market.
Meanwhile, 'supply is not too tight [in Fujairah] at the moment,' a bunker trader in the Middle East said this week.
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