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Fujairah bunker premium drops from record high, but may find support at current level

Bunker fuel premiums in Fujairah dropped last week after hitting a record high mid-September as supply tightness had eased a little, however, current levels were still high compared to the first half of the year, S&P Global Platts data showed.

Some market sources expect the premiums to hover around current levels in the near term, amid steady demand.
The ex-wharf 380 CST bunker fuel premium to Mean of Platts Arab Gulf 180 CST high sulfur fuel oil assessments fell for a third consecutive trading session Friday, closing at $11.32/mt. The premium had hit a record high of $20.70/mt on September 18, 2018, the data showed.

An increase in arbitrage flow to the East had tightened fuel oil cargo supply in the Middle East market over the last few weeks, triggering the rise in premiums, market sources said.

“Cargo availability is still on the tight side, but it is now slightly better than previously,” a Fujairah bunker trader said.

“We are still seeing a discussion range of around plus $8/mt to plus $15/mt [to MOPAG 180 CST HSFO assessments],” another trader said.

Current ex-wharf premiums were still much higher than an average of plus $3/mt to MOPAG 180 CST HSFO assessments seen in the the first half of the year, Platts data showed.

Bunker fuel demand at Fujairah has also been steady since August, owing to lingering fears of quality issues at other Asian ports.

“Vessels, which are taking routes from North Asia to the Arab Gulf, have increased bunkering volume in Fujairah instead of taking it in Singapore,” a shipping source said.

Fujairah is one of the key bunkering hubs in the world.

Source: Platts

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