Asia Residual Fuels: Key Market Indicators For Jan. 31-Feb. 4

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Rising stocks of low sulfur fuel oil at Fujairah have narrowed ex-wharf marine fuel 0.5%S premiums at the Middle Eastern port of Fujairah, even as barge availability for VLSFO deliveries in the week beginning Jan. 31 are expected to tighten, traders there said, says an article published in Platts.

An uptick in Russian volumes into Singapore is simultaneously expected to ease some of the blend component tightness in the high sulfur fuel oil market, bunker suppliers in the city-state said, despite prompt supply remaining “slightly tight.”

Morning discussions for the March ICE Brent futures contract were at $90.95/b at 0100 GMT Jan. 31, up $1/b from the 0430 GMT Jan. 28 level of $89.95/b, Intercontinental Exchange data showed.

Marine Fuel 0.5%S

The Singapore Marine Fuel 0.5%S February/March spread Jan. 31 fell to $12.75/mt from the Jan. 28 assessment of $13.55/mt, with the spread bid at $12/mt against an offer at $13/mt, according to Intercontinental Exchange data.

Marine fuel 0.5%S supply is expected to remain tight as the market lacks blending stocks with a sulfur content of 0.2%-0.3% to cut sulfur content, market sources said.

Low sulfur straight-run fuel oil cargoes from Skikda, Algeria, are moving toward the US, while they typically come to Asia as a sulfur cutter stock, fuel oil traders said.

A strong gasoil market also is hindering vacuum gasoil and light cycle oil from coming into the low sulfur fuel oil blending pool, market sources said.

Bunker suppliers in Singapore expect the rising availability of low sulfur fuel oil to shorten bunkering lead times to around 4-7 days, from 7-11 days in early-January when inventories were tighter, local traders said.

The market expects Fujairah’s LSFO barge availability to remain tight throughout the week started Jan. 31, according to bunker suppliers.

Climbing stockpiles of LSFO at Fujairah have softened premiums of the ex-wharf grade to $10-$15/mt over Singapore Marine Fuel 0.5%S cargo assessments for February term contractual supply, below premiums of $12-$18/mt offered for term supply in January.

High sulfur fuel oil

The Singapore 380CST high sulfur fuel oil February/March spread fell Jan. 31 to $2.50/mt Jan. 31 from the Jan. 28 assessment of $2.95/mt, according to Intercontinental Exchange data.

The cash differentials of the 180 CST and 380 CST HSFO FOB Singapore assessments are expected to stabilize amid an influx of Russian grade cutter stock cargoes, typically of 2.7% sulfur quality, to produce on-specification 3.5% sulfur HSFO, traders in Singapore said.

Enterprise Singapore data showed that imports from Russia in the four-week period ending Jan. 26 totaled 355,260 mt, nearly 200,000 mt higher from the previous four-week period ending Dec. 29, 2021.

Additionally, demand from North Asia is expected to decline toward March, as power utilities have already finished their purchase for winter demand.

As a result of easing tightness, Singapore’s HSFO bunker inventory remains ample for downstream delivery, albeit with a slight tightness for prompt requirements, bunker suppliers said.

Competitive offers for Fujairah-delivered 380 CST HSFO bunkers are expected amid rising inventories, as suppliers are likely eager to move oil cargoes amid a strong flat price environment driven by strengthening crude oil markers, market sources said.

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Source: Platts

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