Tanker, gulf
Tanker ships in the waters of the Gulf of Oman off the coast of the eastern UAE emirate of Fujairah. Image Credit: AFP

Fujairah: Stockpiles of bunker fuels and other heavy residues and distillates climbed to a record in Fujairah this week, as shippers switched fuel types to meet new rules taking effect in January 2020, according to data released on Wednesday by the Fujairah Oil Inventory Zone (FOIZ).

Heavy distillates and residues rose 10 per cent to 15.42 million barrels as of Monday, the highest since data began to be compiled in January 2017.

Demand is shifting from high sulphur fuel to low sulphur fuel as implementation of the International Marine Organisation regulation looms, said Apurva Mali, sales manager at Masc Co DMCC, a broker in bunker fuels in Dubai.

“This is all related to changes coming up from January, some places have already switched to low sulphur and some have to get their tanks cleaned up,” he said. “There is less demand for the high sulphur fuel.”

The price of 380 CST high sulphur bunker fuel has “dropped quite a lot” and is currently about $264/metric tonne in Fujairah, he said. That compares with Fujairah-delivered marine fuel 0.5 per cent sulphur at $555-$560/mt, according to S&P Global Platts. The IMO rule requires ships to lower their fuel sulphur content to no more than 0.5 per cent, from 3.5 per cent currently.

All product categories showed gains in stockpiles over the past week, bringing the total up 10 per cent to 25.14 million barrels, the highest since April 29 this year.

The biggest increase came from light distillates, which climbed 11 per cent to a four-week high of 6.19 million barrels.

Light distillates covered in the report are gasoline, naphtha and condensates that are stored in white product tanks and have an API of 45 degrees and above.

Middle distillate stocks advanced 9 per cent to a one-year high of 3.51 million barrels. The category includes gasoil, diesel, marine gasoil, jet fuel and kerosene.

The East of Suez gasoil market has seen an increase in distillate exports out of China, according to a Platts report Wednesday.

The country’s state-owned refiners are trying to use up their oil product quotas before the end of the year. This higher outflow comes at the same time there are unsold cargoes in the region, according to the Platts report.

S&P Global Platts is the official publisher of the oil products data. Fujairah has the Middle East’s largest commercial storage capacity for refined products.