The Port of Fujairah is to start publishing regular data on oil inventories to increase transparency, as part of its broader effort to develop itself as the region’s oil trading hub.
Inventory data is one of the key pieces of information that spurs trading activity, as it provides one of the more objective and transparent reads on world oil supply and demand.
It was, for example, an early indicator of the oversupply that has bedevilled the world oil market for more than two years.
Weekly data will be published on an aggregate basis for the major categories of refined oil products, including fuel oil, middle distillates (such as diesel), and light ends (including petrol).
A starting date has not yet been determined.
Fujairah is still relatively small compared with other world energy hubs. For example, stored fuel oil alone in Singapore was as much as 30 million tonnes this year, compared to Fujairah’s total storage capacity of under 10 million tonnes.
Total oil inventories in the US and European Union are about 300 million tonnes and 220 million tonnes, respectively.
But the Fujairah data will help spur trading on, for example, price differences between Singapore and the Middle East.
“The release of inventory data is a major step forward in market development terms as it brings Fujairah into line with other major global oil hubs around the world,” said Owain Johnson, the managing director of the Dubai Mercantile Exchange, where regional benchmark Oman crude oil futures contracts are traded.
The DME yesterday said it would add two new contracts aimed at traders hedging, or betting on, the difference between the price of fuel oil in Singapore and in Fujairah, as assessed by S&P’s Platts commodities data service.
The contracts will be listed as Singapore vs Middle East, with two options available based on viscosity, as measured in centistokes: Fuel Oil 180 cSt or 380 cSt.
“The increased market transparency is a major positive in terms of the development of stand-alone benchmarks around the Fujairah oil hub,” said Mr Johnson.
The UAE central government has backed Fujairah’s efforts to develop its trading hub infrastructure and Suhail Al Mazrouei, the UAE’s Energy Minister, blessed the move. “This transparency initiative will play a key role in Fujairah’s evolution from a key logistics hub for the region into a trading hub for global energy markets,” he said.
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