Morning discussions for the December ICE Brent futures contract were trading at $86.36/b at 0300 GMT Oct. 25, up from the $84.77/b level at 0830 GMT Oct. 22, Intercontinental Exchange data showed, reports Platts.
Sentiment in the Asian marine fuel 0.5% and high sulfur fuel oil markets stood in contrast, amid firmer demand for very low sulfur fuel oil from North Asia and tightening supply in China. This is in contrast to dwindling power demand in the Middle East and South Asia for HSFO.
Marine Fuel 0.5%
Discussions for the Singapore Marine Fuel 0.5%S November/December spread Oct. 25 declined slightly from the Oct. 22 assessment of $5.25/mt, with a morning trade seen at $5/mt, according to Intercontinental Exchange data.
Singapore marine fuel 0.5%S is expected to remain firm as demand from North Asia is growing on high LNG prices.
South Korea’s Korea East-West Power has bought 100,000 mt of low sulfur fuel oil with maximum 0.3% sulfur for October delivery, while Korea District Heating Corporation issued a tender to buy 60,000 mt of LSFO for November and December delivery.
Japan is likely to buy more fuel oil for winter, while some of the demand is coming from LNG, market sources said.
More fuel oil is flowing into China from Singapore as Chinese refiners are shifting to gasoil production. At least eight Aframaxes were chartered to load fuel oil on the route in the month, up from the usual three-five cargoes, according to brokers.
Strong demand for low sulfur fuel oil bunkers tightened barge availability at Fujairah, which traders expect only to ease after Oct. 27-28.
Firming demand for Fujairah-delivered marine fuel 0.5% has also stretched cargo availability “thin” since October, while sources indicated replenishment cargoes arriving over the next few days.
Platts data showed that the premiums of Fujairah-delivered marine fuel 0.5%S against FOB Singapore Marine Fuel 0.5%S cargo assessments gained $6.06/mt week on week to $12.52/mt during the week ended Oct. 22
According to industry sources, the steady stream of prompt inquiries for Singapore-delivered marine fuel 0.5%S has tightened barge availability in the near term, shoring up premiums of the delivered grade.
Premiums of Singapore-delivered marine fuel 0.5%S against FOB Singapore Marine Fuel 0.5%S cargo assessments averaged $10.12/mt during the week ended Oct. 22, up from the average of $9.26/mt the week prior, according to Platts data.
High sulfur fuel oil
Discussions for the Singapore high sulfur fuel oil November viscosity spread Oct. 25 rose to $8.25/mt from the Oct. 22 assessment of $8/mt, according to Intercontinental Exchange data. Bids were seen at $8/mt against no offers.
In contrast to the Singapore marine fuel 0.5% market, the high sulfur fuel oil market is expected to weaken.
Kuwait Petroleum Corp sold 100,000-120,000 mt of HSFO cargo unexpectedly after a fire broke out at a sulfur removal unit in its Mina Al-Ahmadi refinery.
Kuwait used to be an importer of HSFO as it bought 240,000 mt of HSFO for October delivery, and it bought 320,000 mt for September delivery, which had supported the Asian HSFO market in August and September.
Even before the fire, Asian HSFO market had started weakening as the summer peak demand season was over. Demand from a power sector in the Middle East and South Asia was dwindling as temperatures got lower.
The spread between Singapore marine fuel 0.5% and 380 CST HSFO widened to $144.37/mt, the highest since Feb. 24, last year, S&P Global Platts data showed.
As the bunker delivery lead time of Singapore-delivered 380 CST HSFO blows out to 6-12 days due to tight supplies, compared to the usual 4-6 days, a pickup in spot demand is unlikely as suppliers could not meet buyers’ bunker requirements, traders said.
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Source: Platts
