Fujairah feels downturn as marine fuel demand slumps

Tanker ships in the waters of the Gulf of Oman off the coast of the eastern UAE emirate of Fujairah, which has begun to feel the effects of the global downturn on its core industries. (AFP)
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Updated 19 June 2020

Fujairah feels downturn as marine fuel demand slumps

  • The coronavirus pandemic has hit global demand, months after Qatar boycott and tanker attacks

SINGAPORE: Ship fueling activity in Fujairah in the UAE, a bunkering and fuel storage hub in the Middle East, fell in May as declining demand was made worse by slowing global trade because of the coronavirus pandemic, four trade sources said.

Fujairah’s ship refueling — or bunkering — volumes shrank to about 200,000-300,000 tons in May, down from average volumes of about 700,000-800,000 tons, said the sources with knowledge of the regional trade who declined to be identified.

“It’s all things COVID,” said one of the sources, a UAE-based marine fuels trader, pointing to lower shipping activity, and referring to COVID-19, the respiratory disease that has become a pandemic, caused by the coronavirus.

Fujairah bunker demand has been declining as the economic impacts of the pandemic caused global trade to slow. Additionally, crude oil tanker traffic in the region has dropped after the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia cut supplies to prop up prices.

For June, bunkering activity was “very slow still” with only a handful of enquiries each day, said the trader.

The weak demand helped push Fujairah’s residual fuel inventories to a record high in June.

The Port of Fujairah did not respond to a request for comment when contacted.

By comparison, bunkering volumes in Singapore, the world’s top bunkering hub, were 3.925 million tons in May, down just 2 percent from a year earlier despite cargo ship arrivals falling to a 27-year low.

Fujairah’s bunkering volumes were falling even before the coronavirus outbreak.

Volumes began to come off its average monthly peak of about 1 million to 1.2 million tons in 2017 after the UAE’s boycott of Qatar cut shipping activity.

There were also several attacks on tankers last year around the Strait of Hormuz and the Gulf of Oman.

A global switch to cleaner low-sulfur marine fuels in 2020 has also reduced bunkering in Fujairah as quality and compatibility concerns drove buyers to turn to suppliers in Singapore, the trade sources said. 

Decoder

What is bunker fuel?

Bunker fuel is the term used for fuel poured into a ship’s bunkers to power its engines.


S&P 500 inches closer to record high

Updated 12 August 2020

S&P 500 inches closer to record high

  • US stock market index returns to levels last seen before the onset of coronavirus crisis

NEW YORK: The S&P 500 on Tuesday closed in on its February record high, returning to levels last seen before the onset of the coronavirus crisis that caused one of Wall Street’s most dramatic crashes in history.

The benchmark index was about half a percent below its peak hit on Feb. 19, when investors started dumping shares in anticipation of what proved to be the biggest slump in the US economy since the Great Depression.

Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second quarter earnings season have allowed all three of Wall Street’s main indexes to recover.

The tech-heavy Nasdaq has led the charge, boosted by “stay-at-home winners” Amazon.com Inc., Netflix Inc. and Apple Inc. The index was down about 0.4 percent.

The blue chip Dow surged 1.2 percent, coming within 5 percent of its February peak.

“You’ve got to admit that this is a market that wants to go up, despite tensions between US-China, despite news of the coronavirus not being particularly encouraging,” said Andrea Cicione, a strategist at TS Lombard.

“We’re facing an emergency from the health, economy and employment point of view — the outlook is a lot less rosy. There’s a disconnect between valuation and the actual outlook even though lower rates to some degree justify high valuation.”

Aiding sentiment, President Vladimir Putin claimed Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine. But the approval’s speed has concerned some experts as the vaccine still must complete final trials.

Investors are now hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with US cases surpassing 5 million last week.

Also in focus are Sino-US tensions ahead of high-stakes trade talks in the coming weekend.

“Certainly the rhetoric from Washington has been negative with regards to China ... there’s plenty of things to worry about, but markets are really focused more on the very easy fiscal and monetary policies at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Financials, energy and industrial sectors, that have lagged the benchmark index this year, provided the biggest boost to the S&P 500 on Tuesday.

The S&P 500 was set to rise for the eighth straight session, its longest streak of gains since April 2019.

The S&P 500 was up 15.39 points, or 0.46 percent, at 3,375.86, about 18 points shy of its high of 3,393.52. The Dow Jones Industrial Average was up 341.41 points, or 1.23 percent, at 28,132.85, and the Nasdaq Composite was down 48.37 points, or 0.44 percent, at 10,919.99.

Royal Caribbean Group jumped 4.6 percent after it hinted at new safety measures aimed at getting sailing going again after months of cancellations. Peers Norwegian Cruise Line Holdings Ltd. and Carnival Corp. also rose.

US mall owner Simon Property Group Inc. gained 4.1 percent despite posting a disappointing second quarter profit, as its CEO expressed some hope over a recovery in retail as lockdown measures in some regions eased.

Advancing issues outnumbered decliners 3.44-to-1 on the NYSE and 1.44-to-1 on the Nasdaq.

The S&P index recorded 35 new 52-week highs and no new low, while the Nasdaq recorded 50 new highs and four new lows.