Asia Residual Fuels: Key Market Indicators for Nov 29-Dec 3

Asian HSFO market

In contrast, the Asian high sulfur fuel oil market is expected to continue weakening in December as demand from regional power generators wanes after being buoyed for much of the third quarter and in October by demand from the Middle East and South Asia.

ICE Brent crude oil futures contract

The January ICE Brent crude oil futures contract was trading around $76/b at 0200 GMT Nov. 29, down more than $2/b from the 0830 GMT Nov. 26 Asian market close, but rebounding after a more than 10% plunge in later trade was triggered by the emergence of the Omicron coronavirus variant.

Marine Fuel 0.5%

• Broker indications for the Singapore Marine Fuel 0.5%S December-January spread were lower at $18.50/mt mid-morning Nov. 29 from the Nov. 26 assessment at $19.50/mt, with the spread bid at $17.50/mt against an offer at $18.75/mt, according to Intercontinental Exchange data.
• The cash differential to the FOB Singapore marine fuel 0.5% assessment hit a near two-year high Nov. 26 at $18.83/mt amid an anticipated supply shortage in H1 December, S&P Global Platts data showed.
• “There’s hardly any cargo to be found, which is why the best counter-offer you get over that period [H1 December] is at least $3-$4/mt higher than the bids,” a Singapore-based trader said.
• Tight supply and firm demand for low sulfur marine gasoil with a maximum 0.1% sulfur content at Zhoushan is expected to shore up premiums of the delivered grade this week, traders said, after it hit a multi-month high of $104.52/mt Nov. 26 against the benchmark FOB Singapore gasoil 10 ppm cargo assessment. The premium was last higher Jan. 28, 2020 at $110.79/mt, Platts data showed.
• The Zhoushan Oceanic Meteorological Observatory has forecast strong winds forecasts exceeding permissible limits for Nov. 29-Dec. 1, which traders say could lead to the suspension of bunkering operations at the port.
• South Korean bunker suppliers have been offering December slots since late November as inventories of LSFO and LSMGO bunker grades are running low, which has limited product availability for prompt delivery at end November.
• LSFO bunker supply remains ample in Hong Kong, traders said, with replenishment cargoes totaling 1,190,346 barrels, or 187,456 mt, discharged over Nov. 22-25, according to Kpler data.

High sulfur fuel oil

• Broker indications for the December 380 CST HSFO East-West spread were higher at $19.75/mt in mid-morning trade Nov. 29 than the Nov. 26 assessment of $18.45/mt, according to ICE data.
• Middle East premiums for HSFO are not expected to see much improvement in December, a trader based in Fujairah said, after retreating on expectations that Kuwait Petroleum Corp. will not procure any more HSFO cargoes to meet domestic power demand.
• Sentiment was further dampened by Pakistan State Oil not awarding its tender seeking 65,000 mt of HSFO for delivery in H1 December, a trader who participated in the tender said.
• Both low and high sulfur fuel oil bunker nominations in Japan for end November have been delayed to early December due to low fuel oil stockpiles, which led suppliers to retract offers amid expectations of tight barge availability and berth congestion, market sources said.
• Premiums for Japan-delivered 380 CST HSFO to the benchmark Singapore 380 CST HSFO cargo assessment averaged $87.25/mt Nov. 22-26, surging from $79.78/mt the week before, Platts data showed, as bunker suppliers indicated earliest delivery around Dec. 4-5.