FUJAIRAH DATA: Oil product stocks dip following record increase a week ago
2nd March 2022 09:33 GMT

Oil product stocks in the UAE port of Fujairah fell 0.5% as of Feb. 28, reflecting a modest decline after a record increase a week ago, according to Fujairah Oil Industry Zone’s data shared with S&P Global Commodity Insights.

Total oil product stocks stood at 19.024 million barrels in the week of Feb. 28, down from 19.118 million barrels a week earlier, the data showed.

In the week of Feb. 21, inventories rose by a record 34% from a week earlier, reflecting the highest surge since reporting began at the start of 2017. As of Feb. 21, inventories had recovered from their lowest on record; a 28% drop and the largest one-week plunge in volumes since reporting began.

The drop in oil product stocks in the week of Feb. 28 was led by heavy residues, which fell 6.5% to 9.773 million barrels.

Bunker players and shipping-related sources in Asia and the Middle East are keeping a close eye on developments related to the Russia-Ukraine crisis, with many preparing for higher marine fuel prices amid tightening supply and firm demand, although direct effects from the conflict are expected to be minimal for now.

For Fujairah, although sentiment about the potential impact of the Russia-Ukraine tensions was mixed, most traders based in the Middle East bunkering hub agreed that the direct impact of the crisis will probably be negligible.

Low sulfur fuel oil cargoes at Fujairah are tight but barge supply has been steady, and any impact from the Russia-Ukraine conflict has yet to be seen, traders said.

Fujairah middle distillates, including gasoil and jet fuel, declined 4.5% week on week to 2.464 million barrels, data showed.



Supply disruptions


The ongoing risk of direct sanctions imposed on Russian oil exports as the war intensifies, coupled with risk premiums incorporated into freight from the Black Sea, continues to strengthen the gasoil complex.

Supply disruptions to Russian gasoil exports could increase the pull for Asian gasoil cargoes to the West, supporting East-West arbitrage flows, while tightening the supply balances in Asia further, sources said.

The decline in heavy residues and Middle distillates was offset by 11.5% uptick in light distillate stocks to 6.787 million barrels.

Gasoline supply is expected to tighten, as Chinese gasoline exports are likely to continue falling in March, with Indian exports heard to have been directed away from the Middle East toward Asia, a situation that is unlikely to meet overall demand, market sources said.

However, naphtha demand has been tepid on the back of a thin reforming spread and narrowing olefin margins.

Gasoline producers are expected to steer away from using naphtha as a blendstock, as the reforming spread narrowed on the week. Demand for naphtha as a cracker feedstock was dampened, as olefin margins were thin.

Bunkerworld ,
2nd March 2022 09:33 GMT