Singapore — Market demand continues to sustain buying interest for Asian high sulfur fuel oil in the weeks ahead, while a pickup in buying interest for Singapore low sulfur fuel oil in July has largely been offset by high stocks in both Singapore and Fujairah.
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** The Singapore Marine Fuel 0.5%S market has seen a revival of buying interest so far in July, even as traders expect August-delivery arbitrage volumes to fall compared to July, due to the narrow Asia-Europe price spread, fuel oil traders said.
** Trading sources shrugged off the 2.1% weekly decline in Singapore's onshore residue stocks to 26.11 million barrels in the week ended July 15, noting that on-shore stocks remain high relative to demand. Traders also pointed to approximately 5 million mt of fuel oil currently held in floating storage in Singapore waters.
** The Singapore Marine Fuel 0.5%S August/September contango narrowed to minus $1.50/mt on July 17, the highest since February 21, according to S&P Global Platts data.
** On the bunker side, suppliers remain bearish on demand in the week ending July 25, pointing to buyers procuring on a need-only basis amid the current ample supply.
** Reflecting the subdued sentiment in July, the July 17 Singapore-delivered Marine Fuel 0.5%S bunker premium to Singapore Marine Fuel 0.5% cargo assessment was assessed at $18.50/mt, half the 18-week high premium of $36.08/mt on April 30, Platts data showed.
** In the Northeast Asian bunker market, stiff competition among low sulfur bunker suppliers at Zhoushan is expected to keep a lid on bunker fuel premiums, according to traders in the region.
** The Zhoushan delivered marine fuel 0.5%S differential to the benchmark FOB Singapore Gasoil 10ppm cargo assessments averaged minus $38.88/mt over the week ended July 18, down from the average in the week ended July 9 of minus $35.28/mt, Platts data showed.
** Furthermore, in anticipation of more price volatility over the third quarter, traders said Chinese suppliers have mostly chosen not to ink term contracts for this period.
High sulfur fuel oil
** More high sulfur fuel oil cargoes is expected to be exported from Taiwan in August after a fire on July 15 caused Formosa Petrochemical Corp. to shut its residue desulfurisation unit at Mailiao, according to traders, who added there is expected to be no impact to the domestic bunkering sector.
** Meanwhile in the Singapore downstream bunker market, tight supply is expected to support the market, with at least one major supplier not offering any HSFO bunkers in the near term, according to traders.
** Reflecting this strength, the Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo assessments increased to $23.91/mt on July 17 compared with $14.01/mt on July 9.
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Asia residue fuel market - Key market indicators this week - S&P Global
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