08-09-2018

Singapore 180 CST HSFO cash differential hits 5-month low on higher supply

The Singapore 180 CST high sulfur fuel oil cash differential fell to a five-month low due to an increase in supply of low-viscosity cargoes, S&P Global Platts data showed.

The cash differential was assessed at 98 cents/mt at the close of Asian trade Thursday, the lowest since March 29 when it was at 50 cents/mt, Platts data showed. The 180 CST HSFO grade was assessed at $440.18/mt Thursday, down $2.72/mt day on day.

While both 180 CST and 380 CST grades are weakening with more arbitrage cargoes coming into Singapore, fuel oil traders said low-viscosity cargoes — mainly from the Middle East and India — have been heading to Singapore at a faster rate than high-viscosity grades.

Singapore is expected to receive more than 4 million mt of arbitrage supply from Europe and the US in September, up from monthly volumes of 3.5 million-4 million mt in July and August, trade sources said.

This has also pressured down the cash differential for 380 CST HSFO to $3.22/mt Thursday, the lowest since July 5 when it was assessed at $3.10/mt, Platts data showed.

Meanwhile, market participants are expecting bunker fuel premiums to ease this month, as fuel oil supply increases and cargo differentials weaken. “Ex-wharf premiums [to Mean of Platts Singapore 380 CST HSFO assessments] are likely to come off gradually with more cargoes expected,” a Singapore bunker fuel trader said.

Earlier in August, bunker fuel premiums had stayed largely supported amid concerns over off-spec fuel oil in Singapore, sources said.

Spot ex-wharf 380 CST bunker fuel premiums to MOPS 380 CST HSFO had averaged $9.69/mt in August, up from an average of $6.77/mt in July, Platts data showed.

Premiums or discounts for physical bunker fuel reflect the price that buyers are willing to pay relative to the published benchmark HSFO values.

Source: Platts

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