Symbol of Demand; UAE’s Fujairah oil products stockpiles rise amid high prices

Considered as a pointer to the regional demand for refined products, stocks of oil products at the UAE’s East Coast port of Fujairah have risen for the first time in three weeks, driven by gains in gasoline and other light distillates.

According to data released on 24th June from the Fujairah Oil Industry Zone (FOIZ), total stockpiles moved upward by 0.3 percent on the week to 30.218 million barrels as of 22nd June, after setting a record high of 30.71 million barrels on 1st June. Light distillates increased 10 percent to 8.244 million barrels, while both middle and heavy distillates weakened.

Fujairah stockpiles are proof of regional demand for refined products, with total inventories producing four record highs since early May as the global pandemic restricted 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 24th June. 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 dropped by 8 percent in the most recent week, to 5.073 million barrels, after hitting a record 5.997 million on 1st June. The category comprises jet fuel, kerosene, gas oil, diesel and marine bunker gas oil.

Heavy distillates diminished 1 percent to 16.901 million barrels after reaching an all-time high of 17.178 million on 8th June. Bunker fuel prices have been climbing on the back of increased crude prices, according to a Platts report about the inventories on 24th June. Marine fuel with 0.5 percent sulfur delivered in Fujairah was assessed at US $320/mt on 23rd June, up by US $10/mt from a week earlier, according to Platts, the official publisher of the Fujairah inventory data.