Fujairah oil product stocks rise 8% on signs of weakening demand

FUJAIRAH, Oil product stocks in the Middle Eastern hub of Fujairah rose eight percent week on week to 23.302 million barrels on Monday, according to data released by the Fujairah Oil Industry Zone.

The data, released on Wednesday, noted all oil product categories showed increases as efforts to contain the coronavirus, COVID-19, took hold.

The biggest jump was in middle distillate stocks, which climbed 23 percent to 3.071 million barrels, the highest in three weeks. The category includes jet fuel, which has been hit hard by coronavirus as many governments impose travel restrictions and lockdowns for entire countries to try to contain the virus. The category also includes kerosene, gasoil, diesel and marine bunker gasoil.

Light distillate stocks climbed five percent week on week to 7.065 million barrels, a two-week high. The category includes gasoline, gasoline blending components and naphtha and other light petrochemical feedstocks and condensates.

Stocks of heavy distillates and residue rose seven percent to 13.166 million barrels, also a two-week high. The category includes fuel oil and other heavy fuels used for marine bunkers and power generation.

"I can only assume that there has been some demand slowing due to COVID-19 across the barrel and traders may be taking advantage of contango trades," Chris Wood, managing director of Dubai-based Uniper Energy DMCC, told S&P Global Platts. Asked if he had seen any slowdown at the Uniper refinery at Fujairah, he said, "No. Still running at 100 percent available production capacity."

Total oil products demand in the Middle East will likely fall 0.6 percent year on year to average 9.7 million b/d in the first half of this year, according to Platts Analytics. The drop compares with 1.1 percent year-on-year growth in the first half of 2019.

The East of Suez gasoline market has been under intense downward pressure due to lagging demand, S&P Global Platts said Wednesday in a report. Physical cracks for 92 RON gasoline in Singapore have tumbled in recent days with Tuesday seeing the grade assessed at a 70 cents/b discount to front month ICE Brent futures, the first time they have turned negative since February last year.

Demand for marine bunkers has followed the overall slowdown in global trade, with shippers showing no signs of rushing to cover requirements, Platts said in the report. Delivered bunkers for marine fuel with 0.5 percent sulfur in Fujairah were assessed at US$285/mt on Tuesday, down $45/mt week on week.

The jet fuel market was hit again Tuesday, when the airline trade association IATA confirmed that the worst-case scenario for global airline losses has become a reality, with expectations of a $113 billion decline in revenue, adding that global airlines will need up to $200 billion in government support to combat the coronavirus pandemic. The Asian jet fuel cracking margin fell to its lowest in over 16 years at the close of Asian trade Tuesday, according to Platts.

Platts holds exclusive rights to publish Fujairah oil inventory data, and has deployed a blockchain network for its collation.

Source: Emirates News Agency