SINGAPORE - Oil product inventories in the United Arab Emirates' (UAE) Fujairah bunkering and oil hub in the Middle East jumped to record highs in the week to May 18, data from industry information service S&P Global Platts showed on Wednesday.
Fujairah's overall oil product inventories soared to 30.262 million barrels in the week to May 18, above the previous record of 27.859 million barrels in the week before, the data showed.
Inventories for middle distillates and those for residual fuels also rose to records in the week to Monday at 5.573 million barrels and 16.453 million barrels, respectively.
Fujairah's light distillate inventories stood at a nine-month high of 8.236 million barrels, the data showed.
"All the tank farms are still full," said Tony Quinn, chief executive of storage consultants Tankbank International.
Fujairah's inventories rose amid lower tank throughput rates which have fallen by as much as 30% since January, said Quinn, in a sign of weak fuel demand as fewer oil cargoes are loaded onto ships for distribution.
A collapse in fuels demand due to widespread lockdowns to limit the spread of the coronavirus has caused fuel inventories in global storage hubs balloon. Additionally, oil traders are taking advantage of the contango market structure for fuels, which incentivises storing supplies for later sales since future deliveries are worth more than those for immediate delivery.
"The contango play is still there so many cargo suppliers utilizing storage as much as they can," said one UAE-based oil trader.
While the front-month contango structure for benchmark Asian gasoil, jet fuel and low-sulphur fuel oil widened to records in March and April, an improved demand outlook and a narrowing contango currently may see inventories gradually begin to ease.
"Hopefully now that contango is thin, (suppliers) will start releasing stocks soon," said a second UAE-based oil trader.
(Reporting by Roslan Khasawneh and Koustav Samanta; Editing by Christian Schmollinger) ((firstname.lastname@example.org; +65 6870 3121; Reuters Messaging: email@example.com))