Trader cites increased costs of mixing components
Fujairah premiums on average higher this month
Total inventories have fallen 23.4% since December 2020
Inventories of petroleum products at the port of Fujairah in the United Arab Emirates fell to their lowest level in five weeks, with heavy distillates falling the most in more than three years, according to data from the Dec. 8 area of the United Arab Emirates. Fujairah’s oil industry supplied exclusively to S&P Global Platts.
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Total inventories stood at 15.77 million barrels as of Dec.6, down 12.9% from the previous week and the lowest since Nov. 1, the data showed. Heavy distillates used for marine bunkers and power generation fell 24% during the same period, the largest drop since February 2018, according to data compiled by Platts since January 2017. Heavy distillate inventories have increased dropped to 9.025 million barrels as of Dec.6. also the lowest since November 1.
Demand for shipping bunker fuels has increased, especially for the low-sulfur variety, as costs rise, traders said. Demand is particularly acute for immediate supplies, limiting the availability of barges and this tension is expected to last until mid-December, industry sources said.
A trader noted increased costs and decreased supplies of blending components used to produce low sulfur fuel oil.
“This increased both off-dock cargo premiums and marine fuel deliveries by 0.5% S,” said a Fujairah-based bunker supplier. Premiums of 0.5% S of marine fuel delivered to Fujairah compared to the valuation of Singapore benchmark marine fuel shipments of 0.5% S averaged $ 16.95 / mt this month- ci through Dec. 8, up from the November average of $ 16.56 / mt, according to Platts data.
The trader would not say what components of the mixture were missing. In Singapore, LSFO is produced from vacuum gas oil, fuel oil from Brazil or low sulfur Skikda barrels from Algeria.
Despite the decline in inventories, bunker fuel supplies are considered sufficient, traders said. High sulfur fuel oil supplies have remained stable, they said.
“Barges are fully engaged at the moment, while the bunker supply is generally balanced against demand,” the Fujairah-based bunker supplier also said.
Middle distillates jumped 25% on weekdays to 2.348 million barrels as of Dec.6, a two-week high, according to FOIZ data. Light distillates advanced 2.1% to 4.397 million barrels, a three-week high. Total inventories are down 23.4% from the same period last year, with middle distillates falling 56.32%. Light distillates declined 33.39% over the same period while heavy distillates increased 4.76%.