26-07-2018

Singapore ex-wharf 380 CST bunker premium hits 3-month high on strong cargo market

The Singapore ex-wharf 380 CST bunker premium hit a three-month high at the Asian close Tuesday, led by firm fundamentals in the high sulfur fuel oil cargo market, trade sources said this week.

The ex-wharf premium to Mean of Platts Singapore 380 CST high sulfur fuel oil assessments rose $1.29/mt day on day to $11.15/mt Tuesday. Ex-wharf 380 CST bunker fuel was assessed at $456.00/mt on Tuesday while 380 CST HSFO cargo was assessed at $444.85/mt, S&P Global Platts data showed.
The premium was last higher at $11.19/mt on April 25, 2018 — around the time bunker specification issues had surfaced.

Stronger cargo differentials and steeper front-month backwardation in the HSFO market have supported ex-wharf premiums in recent days, sources said.

The cargo differential for 380 CST HSFO had surged to a near 37-month high of $7.18/mt at last Friday’s Asian close, and was last assessed higher at $7.19/mt on June 18, 2015, Platts data showed. The cargo differential was assessed at $6.35/mt Tuesday — the fourth highest level this year.

The Singapore 380 CST August/September timespread meanwhile hit $9/mt last week, and was last seen higher on May 29, 2015. The timespread stood at $8.50/mt at Tuesday’s close.

TIGHT CARGO SUPPLY

There is a limited volume of supply replenishment in August, as Singapore is expected to receive only about 3 million mt of arbitrage cargoes from Europe and the US during the month, fuel oil traders said. Singapore typically receives about 5 million mt from Europe and the US.

“In two weeks, I think you will see the lowest stock in recent years,” a Singapore fuel oil trader said.

These factors have in turn led to stronger ex-wharf bunker premiums over MOPS, sources said.

In addition, market participants also raised concerns about the possible arrival of off-spec US-origin fuel oil cargoes in July and August, which could further tighten availability.

“There are a lot of rumors about some fuel cargoes containing phenol, but we don’t see any cases of debunkering yet,” a bunker fuel trader said.

Source: Platts

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