Singapore ex-wharf bunker fuel premiums have come under pressure amid ample supply of high sulfur fuel oil, with buyers flocking to the sidelines amid expectations of a bearish outlook, trade sources said this week.
The Singapore ex-wharf 380 CST bunker fuel spot premium to the Mean of Platts Singapore 380 CST high sulfur fuel oil assessments averaged $8.61/mt over December to-date, compared with $16.09/mt over the whole of November, Platts data showed. The premium stood at $7.06/mt at the Asian close on Wednesday.
Sellers had lowered their offers to clear inventories before the year ends, while HSFO cargo supply is no longer tight as compared with last month.
Latest offers for January ex-wharf 380 CST bunker fuel term contract were between $7/mt to $8/mt over MOPS 380 CST HSFO, while offers for January ex-wharf 500 CST bunker fuel term contracts were between $5/mt to $6/mt to MOPS 380 CST HSFO, according to trade sources.
Buyers opted to wait in view of the weaker market in recent days, on top of slower bunker demand due to the seasonal lull.
“The fuel oil structure is getting whacked so I guess buyers are waiting for that to feed into cash differentials,” a bunker trader said.
The Singapore 380 CST HSFO cash differential had softened in December, with more regional supplies coming into Singapore from the Middle East and North Asia, trade sources said.
“Looking at a weaker cargo market, ex-wharf premiums do seem to be coming off too and we are still waiting to see if it could go down further,” another bunker trader said.
The Singapore 380 CST HSFO cash differential averaged $5.12/mt over December to-date, compared with $8.51/mt over November, Platts data showed. The premium stood at $2.94/mt at the Asian close on Wednesday.
Cargoes of HSFO have been arriving in Singapore, from Europe, since late November to December, following an open arbitrage window over October to November.
Singapore’s residue stocks have grown to 19.594 million barrels as of December 12, up 3.5% from 18.928 million barrels as of November 28, latest data from Enterprise Singapore showed.
In addition to western cargoes, there is sufficient supply as regional cargoes are also headed to Singapore, traders added.