As of Monday, October 22 total oil product stocks in Fujairah stood at 21.612 million barrels – up by 5.8% week on week. Combined product stocks are at their highest since August 14, 2017.
Stocks of light distillates rose by 8.8% week on week to 8.886 million barrels – a record high since the start of weekly inventory reporting in January 2017. Gasoline market sentiment remains weak due to continued movement of European gasoline into the East of Suez. ‘The balance is coming from outside […] people are bringing in cargoes from the Mediterranean,’ a source based in the Middle East said. Demand remains present, with Kuwait’s KPC and Pakistan’s PSO issuing fresh buy tenders this past week, but this is outweighed by heavy supply fundamentals. ‘On the whole, sentiment in the gasoline market is bearish. Although the demand side seems stable, the supply side does not look good with arbitrage cargoes [from the West] coming in and adding on to the high inventories [in Asia],’ a Singapore-based trader said.
Stocks of middle distillates were almost unchanged week on week at 4.353 million barrels. Inventories remain at their highest since March 27, 2017. Gasoil continues to see building positive sentiment, based mainly on the strength of Asian demand. Asian gasoil supply has been constrained by refinery maintenance, even as North Asian bunker, barge and fishing sector requirements and Australian mining industry demand remained robust. Asian demand has drawn in gasoil volumes from the Middle East and India, largely offsetting a lack of arbitrage flows to the West.
Stocks of heavy distillates and residues rose by 5.8% week on week to 8.373 million barrels – a nine-week high. Bunker demand in Fujairah is expected to pick up as flat prices have declined in line with crude. Brent futures fell by 4% overnight to an eight-week low of $76.44/b yesterday. ‘With prices moving down so much today, demand for bunkers increased, with more buyers coming out to purchase,’ one bunker supplier said. In addition to improved demand, some supply tightness was seen due to the snapback of US sanctions on Iran, which is traditionally the key supplier of fuel oil to Fujairah.