Fujairah Stocks Drop to 4-Week Low after 2020 Rollercoaster

Oil product inventories at Fujairah, on the UAE's east coast, dropped to a four-week low at the start of 2021 after a year of wide swings and record highs and lows closely tied to regional traffic restrictions to combat the pandemic.

The total inventories on Jan. 4 stood at 23.371 million barrels, down 0.9% from a week earlier and the lowest since Dec. 7, according to Fujairah Oil Industry Zone data provided exclusively to S&P Global Platts on Jan. 6. Middle distillates including jet fuel and gasoil slumped 11% to 4.47 million barrels, the lowest since Oct. 26, while heavy distillates used for power generation and marine bunkers rose 3% to 11.601 million barrels, the highest since Sept. 14.

Total inventories averaged 23.968 million barrels for 2020 after hitting a record high of 30.71 million barrels on June 1 as demand for jet fuel and gasoline was pummeled by COVID-19. The total was 11% higher than the 2019 average. Gasoline demand has been picking up recently with Pakistan, known to buy from Fujairah, tendering for 2021 deliveries in January, February and March. Light distillates including gasoline and naphtha stockpiles fell to a record low of 4.198 million barrels on Oct. 26.

"The impact of the pandemic led to much higher average stock levels in 2020 versus 2019, particularly for fuel oil and middle distillates," Alex Yap, a senior analyst at Platts Analytics in Singapore, said Jan. 6.

"A sharp contango market structure during the second quarter gave an incentive for stock-building. The fact that light distillates saw a lower average in 2020 is indicative of a robust petrochemical sector and continued gasoline demand in the Middle East."

For middle distillates, 2020 stocks ranged from only 1.859 million barrels on March 23 to a record high of 6.161 million barrels on Nov. 23, averaging 77% higher than in 2019. The 2020 average for heavy distillates was 19% higher than in 2019, while light distillates was 19% lower.