The Singapore delivered marine fuel 0.5% bunker price widened to a record premium of $35/mt to the same grade in Fujairah Friday as supply cancellations by embattled oil trader Hin Leong’s bunker arm Ocean Bunkering Services spurred a mild uptick in demand, S&P Global Platts data showed.
Platts assessed the Singapore delivered marine fuel 0.5% bunker price at $215/mt Friday, down $5/mt day on day and the Fujairah delivered marine fuel 0.5% bunker price at $180/mt, down $10/mt over the same period. The resulting $35/mt spread was the widest since Platts began assessing both grades on July 1, 2019.
In addition to demand from traders looking for replacement deliveries for OBS’ cancellations, market participants said they were seeing an overall improvement in demand in the week ended April 24.
“April demand has improved in part because China has ended its lockdown, so their vessels are moving around Asia again,” a Singapore-based bunker trader said.
Singapore’s commercial onshore residue stocks fell 9% week on week to 22.33 million barrels over April 16-22, latest Enterprise Singapore data showed. Market sources attributed the decrease largely to a recovery in bunker fuel demand.
Bunker fuel values at Fujairah are typically lower than in Singapore, although this flipped in January when barge availability in Fujairah was limited as shipowners stockpiled inventories after the International Maritime Organization’s 0.5% sulfur cap on marines fuels kicked in January 1. Fujairah’s bunker fuel prices averaged at a $10.47/mt premium to Singapore’s in the month.
“In January, you couldn’t get low sulfur bunker fuel in Fujairah even if you could pay. The deliveries in Fujairah were around 10-15 days out compared with 5-7 days in Singapore,” a UAE-based bunker trader said.
This flipped in February when bunker fuel in Singapore averaged at a $5.80/mt premium to Fujairah. February is a seasonal weak month for bunker sales as shippers typically procure sufficient inventories in January.
“There were some shippers who were replenishing inventories ahead of the Lunar New Year holiday and before the coronavirus pandemic spread [to Singapore] so there was some demand in Singapore even though February is usually a dull month,” a second Singapore-based bunker trader said.
The Singapore bunker premium to Fujairah averaged $2.36/mt in March even as the coronavirus pandemic eroded demand.
Looking ahead, market participants anticipate bunker demand in Singapore to remain supported and demand in Fujairah to be more variable.
“Demand in Fujairah has been erratic because there is still a lot of volatility in crude oil prices. At the same time, there are some traders who were on the sidelines because they did not want to offer any bunker fuel as there is no clear price direction,” a second UAE-based bunker trader said.
The second Singapore-based bunker trader said: “We are receiving more inquiries I expect April bunker sales to be slightly higher than in March.”
Source: Platts
