Inventories of oil products at the UAE’s east coast port of Fujairah have climbed for the first time in three weeks, led by gains in gasoline and other light distillates.
Total stockpiles were up 0.3% on the week to 30.218 million barrels as of June 22, after setting a record high of 30.71 million barrels on June 1, according to data released June 24 from the Fujairah Oil Industry Zone. Light distillates rose 10% to 8.244 million barrels, while both middle and heavy distillates declined.
Fujairah stockpiles are a clue to regional demand for refined products, with total inventories setting four record highs since early May as the coronavirus pandemic curbed the need for everything from gasoline to jet fuel and marine fuel. As the authorities in the region began to ease restrictions on movements, light and middle distillates inventories have declined this month.
The gasoline stored in Fujairah is more representative of demand in Pakistan than it is locally, so it reflects export demand and blendstock, Omar Najia, global head of derivatives at BB Energy in Dubai, told S&P Global Platts on June 24. Power used to generate electricity in the region is mostly from natural gas, he added.
“It’s certainly true that the region does use more product in the summer for electricity generation mostly,” he said. “Jet use is increasing also.”
Natural gas is not covered in the inventories, but the heavy distillates category does include fuel for power generation, and analysts have previously said they expect more demand imminently from Saudi Arabia as the weather gets hotter and air-conditioning use increases.
Middle distillates stockpiles fell 8% in the most recent week, to 5.073 million barrels, after hitting a record 5.997 million on June 1. The category includes jet fuel, kerosene, gasoil, diesel and marine bunker gasoil.
Heavy distillates declined 1% to 16.901 million barrels after reaching an all-time high of 17.178 million on June 8. Bunker fuel prices have been climbing on the back of increased crude prices, according to a Platts report about the inventories on June 24. Marine fuel with 0.5% sulfur delivered in Fujairah was assessed at $320/mt on June 23, up $10/mt from a week earlier, according to Platts, which is the official publisher of the Fujairah inventory data.