Oil products inventories at the UAE's Port of Fujairah rebounded to an one-year high amid signs that more fuel oil supplies may be needed to meet power demand for cooling as temperatures climb in the Middle East.
Total stockpiles stood at 22.374 million barrels as of July 25, up 2.3% from a week earlier and the highest since June 28, 2021, according to Fujairah Oil Industry Zone data provided exclusively to S&P Global Commodity Insights on July 27.
Middle distillates inventories jumped 14% to 3.121 million barrels after falling 26% in the week before while heavy distillates and residues used for power generation and shipping rose 2.1% to 12.813 million barrels -- the most since June 21, 2021.
Gasoline and other light distillates stocks stood at 6.44 million barrels as of July 25, down 2.3% from a week earlier and the first drop in four weeks.
About 700,000 barrels of fuel oil were headed to Saudi Electricity Co. from Fujairah in the week started July 18, according to Kpler shipping data. The power company often takes fuel oil from Fujairah during summer months, with shipments in June and May after no activity since September 2021, according to the data.
The high in Riyadh will be 42 C (107 F) July 27 and will hit 45 C in August, according to AccuWeather forecasts.
In all, fuel oil exports from Fujairah were at an estimated 4.75 million barrels in the week started July 18, the most since November 2021. More supplies have been coming in from Russia, Iraq and, recently, Oman.
With the increased supplies, prices of marine fuel bunkers with 0.5% sulfur delivered Fujairah have dropped in recent weeks, falling to $845/mt on July 25, the lowest since May 12, before rebounding to $880/mt on July 26, according to Platts assessments by S&P Global Commodity Insights.
The total oil products inventories at Fujairah are 2.9% higher than this time last year. Residues are leading the way, up 8.9% since July 2021, while middle distillates are 7.3% lower and light distillates are down 2.8%.