Fujairah’s commercial stocks of refined oil products fell 4.2% to 18.983 million barrels in the week to Monday (September 11), remaining below 20 million barrels for a third week since large-scale refinery shutdowns in Texas related to Hurricane Harvey sent shock waves through global oil products markets.
Light and middle distillate stocks fell a combined 760,000 barrels, or 8.4%, to their lowest levels in around three months, while heavy distillates and residues, which account for more than half the total oil product stocks at the UAE port were almost flat, as they have been since mid-August, data released Wednesday (September 13) by the Fujairah Energy Data Committee showed.
Stocks of light distillates, predominantly petrol and naphtha, fell 378,000 barrels, or 6.7%, to 5.302 million barrels – a 12-week low. That was despite the receding impact of Hurricane Harvey, the aftermath of which resulted early this month in a strong draw of European petrol across the Atlantic to meet short US shortfalls, consequently also pulling Middle East petrol stocks west of Suez in the week ended September 4.
In the meantime, Fujairah’s total light distillate stocks are also responding to price movements in Asian petrochemicals markets, which has meant a poor correlation in the past two weeks between their overall level and those of European petrol stocks. The premium of LPG – a propane-heavy mix of gas liquids used for cooking, heating and as petrochemical feedstock – is expected to last for the remainder of this year on winter heating demand.
ARBITRAGE WINDOW REOPENS
Fujairah stocks of middle distillates fell a substantial 11.2% on the week – a 382,000 barrel draw to a 14-week low of 3.02 million barrels. In Europe, gasoil stocks were at relatively low levels due to autumn refinery maintenance in the region coupled with continued shortages of US supplies due to hurricane-related refinery and port disruptions. This has finally resulted in more Middle East gasoil cargoes moving to Europe in response to European prices reaching levels sufficient to overcome the deterrent of high freight rates.
LITTLE MOVEMENT IN HEAVY STOCKS
Fujairah’s stocks of heavy distillates and residues dipped by 73,000 barrels in the week ending September 11, edging down by 0.7% to 10.661 million barrels – a fourth consecutive week below 11 million barrels. Demand for bunkers in both Fujairah and Singapore has been healthy over the past week. Prices for Fujairah 380 CST delivered bunker fuel, however, slipped further relative to Singapore, with discounts widening to about $5.5/mt from $3.75/mt the previous week.