As of Monday, October 1, total oil product stocks in Fujairah stood at 19.272 million barrels. Inventories jumped by 17% week on week to a nine-week high.
Stocks of light distillates rose by 26.1% at 7.432 million barrels – a three month high. Steady demand in the Middle East is pulling in increasing volumes of gasoline from the Mediterranean, which is now long on supply after a tight summer. ‘The Med is still long, it’s even longer now in the winter….. demand is not there, it depends on where the arbitrages are,’ one source said. The arbitrage from the West to the East is still open, as strong demand and refinery issues in the East cause the EBOB/92 RON spread to widen.
Stocks of middle distillates fell by 2.9% week on week to 3.868 million barrels. Sentiment in the middle distillate market is diverging, with robust gasoil set against weakness in jet fuel. Tighter supply out of India is supporting gasoil heading into what is traditionally a strong winter period in 4Q. For jet fuel, a strong Exchange of Futures for Swaps (EFS) has limited movements from India and the Middle East to the West of Suez, further exacerbating the plentiful supplies. North Asia is seen as oversupplied, while rising fuel cost and weakening currencies in a number of Asian markets could begin to impact jet demand.
Stocks of heavy distillates and residues jumped by 21% week on week to 7.972 million barrels, rebounding from last week’s six month low. Bunker demand in Fujairah was subdued in recent days following a surge in flat prices on the back of higher crude futures. With Brent prices at four-year high, delivered prices for 380 CST in Fujairah rose above $500/mt for the first time since October 2014. Short-term demand was likely to stay average to slow as some buyers had already booked before the uptrend, market sources said. Fujairah continues to see some additional demand due to off-spec issues in Singapore; delivered 380 CST fuel in Fujairah was assessed at $11.15/mt above Singapore yesterday.