Fujairah Weekly Oil Inventory Data: Oil Product Stocks up 2.1% on Week To 22.514 Million Barrels

Fujairah Weekly Oil Inventory Data Stocks Level as of Aug. 14, 2017

Fujairah's commercial stocks of refined oil products rose 2.1% on the week to 22.514 million barrels in the week to Monday. The build was, for a second week, mainly due to higher volumes of heavy distillates and residues, which make up the bulk of oil-product stocks at the UAE Arabian Sea port, data released Wednesday by the Fujairah Energy Data Committee, or FEDCom, showed.

Fujairah stocks of middle distillates also rose on the week, while stocks of light distillates fell, reversing the previous week's pattern. Stocks of light distillates, predominantly gasoline and naphtha, totaled 6.416 million barrels, down 298,000 barrels or 4.4% from last week. Light product stocks have remained above 6 million barrels since the start of July, immediately following the Eid al-Fitr holiday marking the end of the Muslim holy month of Ramadan. In June, the regional upturn in social activity, and consequently driving and gasoline demand, typically associated with Ramadan and Eid largely counteracted the tendency of high summer temperatures in the Middle East to cause most of the region's population to stay indoors.

With especially high temperatures prevailing across the Middle East in recent weeks, that tendency is

now taking its full toll of gasoline demand, resulting in a stock build. But the regional gasoline market continues to show some tightness, possibly due to persisting support for demand in both the Middle East and Asia associated with fire damage to refineries. At the Middle East's largest refinery at Ruwais, in the UAE's Abu Dhabi emirate, ongoing repairs to a residue fluid catalytic cracking unit badly damaged in a January fire are expected to take until 2019. S&P Global Platts estimates that about 230,000 mt/month of gasoline production capacity was lost at Ruwais due to the fire.

Chart Attribute: FOIZ Data, August 14, 2017/ Source: FEDCom and S&P Global Platts / Infographics by: The Gulf Intelligence

PERNIS FADING

In Northeast Asia, South Korea's second-largest oil refinery owned by GS Caltex shut a heavy oil upgrading unit August 10 after a fire broke out in the 66,000 b/d vacuum residue hydrocracker at its complex in Yeosu, resulting in a loss of light and middle distillate production capacity. The first/second month time spread for FOB Arab Gulf Gasoline 95 RON was pegged at a backwardation of $1.28/b on Monday -- the strongest this year.

Fujairah stocks or middle distillates totaled 4.039 million barrels on August 14, rising 221,000 barrels, or 5.8%, on the week. The expected resumption of full operations at Shell's 404,000 b/d Pernis refinery in the Netherlands later this month, following a late July fire incident, has cooled interest in moving middle distillates into Europe. Shell began starting halted units last week with a view to restoring full capacity by the end of August. The East-West Gasoil Exchange of Futures for Swaps (EFS) rebounded from an eight-week low last week, indicating narrowing of the arbitrage opportunity to move gasoil west. Spot freight rates for LR1 vessels on the Arab Gulf-UK continent route are currently around $21/mt, compared to an EFS value of -$7.70/mt Tuesday, which will also impede westward flow of gasoil from the Middle East. But the jet-fuel arbitrage from the Middle East to Europe remains in play, with the spread between Rotterdam barges and FOB Fujairah cargoes reaching $32/mt this week. Jet-kero stocks in the Amsterdam-Rotterdam-Antwerp region remain near a seven-month low on European summer travel demand, which could present traders able to access cheap freight rates with an opportunity to move volumes from the Middle East to Europe. But the climb in jet fuel prices in Northwest Europe has been halted by a substantial number of cargoes already en route to the region, which could limit further arbitrage. Fujairah stocks of heavy distillate and residues rose by 536,000 barrels, or 4.7% on the week to a fourweek high of 12.059 million barrels as of August 14.

Chart Attribute: FOIZ Data, August 14, 2017/ Source: FEDCom and S&P Global Platts / Infographics by: The Gulf Intelligence

QATAR UNSOLVED

Bunker demand in Fujairah, the Middle East's major bunkering port, was reported as thin this week, which may reflect lingering uncertainty over shipping restrictions at the port related to the unresolved

regional crisis over Qatar, now in its third month.

In Singapore, ex-wharf 380 CST bunker fuel term contracts for August have been mostly concluded at premiums of $2-$2.25/mt to the Mean of Platts Singapore cargo assessments, compared with premiums of $4-$4.50/mt for July. Lower ex-wharf term premiums in Singapore are a bearish signal for prices in Fujairah, where term premiums have also been trending lower.

Pakistan State Oil last week awarded tenders for five cargoes of 180 CST high-sulfur fuel oil of 65,000 mt each, all loading from Fujairah to Port Qasim in September. This was lower than the seven cargoes tendered for August loading, and in line with the expected seasonal decline in power generation demand from the current summer peak season for air-conditioning until the end of the year. Similarly, fuel oil demand in the Middle East is also expected to begin seeing a seasonal downturn starting in September and October, which could lead to increased fuel oil stock levels later in the year.

About the S&P Global Platts and FOIZ Fujairah Data Project:

The government of Fujairah in 2016 announced a plan to publish weekly data on refined products held at onshore commercial terminals at Fujairah as part of its effort to position the Indian Ocean port as a global oil trading and storage. It appointed S&P Global Platts to distribute the weekly inventory data. FEDCom was established by the Fujairah Oil Industry Zone to collect, verify and distribute inventory data to replicate the data sets provided at other global trading centers such as Singapore and Rotterdam.Fujairah has about 41.5 million barrels of commercial oil product land storage available for leasing.

Source: The Gulf Intelligence