In International Shipping News 15/07/2016
Source: Platts
The Singapore 180 CST high sulfur fuel oil cash differential has hit a near four-month high of 33 cents/mt Wednesday, amid a more optimistic outlook for the fuel oil market ahead in August.
This is the highest the cash differential has been since March 23 this year when it was at 67 cents/mt, S&P Global Platts data showed.
It is also the first time the differential has flipped back into a premium since that same date.
The 180 CST HSFO price has also surged ahead of 380 CST HSFO, with the viscosity spread between the two at $7.32/mt, its widest since July 1 when it was at $8.26/mt, Platts data showed.
It signals that the market is seeing greater availability of higher viscosity and higher density materials, amid expectations of supply tightening in the wider market in August, said one trade source.
The market has been relatively muted over the last three-and-a-half months, with ample supply and record-high inventories at some stages, which kept the arbitrage window from the West closed for a long time, said trade sources.
But sentiment was boosted by low levels of Western arbitrage arrivals of under 3 million mt so far for August, and the outlook appears to be largely positive for the next month, they added.
July has already seen under 3 million mt arriving from the West and onshore stocks were already expected to bolster that low volume.
However, a prolonged period of low volumes from the West would invariably lead to a tighter supply situation for August if inventories continue to fall, trade sources said.
Latest data for the week ended July 6 showed that Singapore’s commercial stockpiles of heavy distillates at 26.91 million barrels.
That compared with 25.56 million barrels reported a week earlier, according to data by government agency International Enterprise Singapore.
While this level is generally regarded as typical, it has seen a drop from the record of over 31 million barrels in the last week of May, IE data showed.
Source: Platts
