Singapore ex-wharf 380 CST bunker fuel term contracts for July were inked at premiums of $5-$6.50/mt over the Mean of Platts Singapore 380 CST high sulfur fuel oil assessments, while latest offers have now risen to $6.50-$7.50/mt, trade sources said this week.
Discussion levels were higher than June terms inked at plus $3-$4/mt, owing to supportive cash differentials in the high sulfur fuel oil market recently, trade sources added.
"Bunker fundamentals are still balanced, but because of tight fuel oil and steep backwardation, premiums are supported on the bunker side," a Singapore bunker fuel trader said.
Initial discussion levels for July term contracts were between $4-$4.50/mt earlier in June, but gained steadily towards the end-June amid supportive fuel oil cargo differentials seen during the period.
The spot cargo differential for MOPS 380 CST HSFO averaged $4.12/mt in the second half of June, edging up from an average of $2.44/mt seen in H1 June, S&P Global Platts data showed. As of Thursday's close, the differential stood at $5.11/mt.
Meanwhile, the spot 380 CST ex-wharf bunker fuel differential to MOPS 380 CST HSFO assessments averaged $4.35/mt in H2 June, edging up from an average of $2.02/mt in H1 June. As at Thursday's close, the differential was seen at $5.02/mt. "There are not a lot of sellers offering for July term now... either it's tight or sellers prefer to sell spot as the [fuel oil] backwardation is steep now," another Singapore bunker fuel trader said.
The stronger backwardation was seen in H2 June, with the prompt paper timespread hitting $7/mt at Thursday's close. The spread was last assessed higher at $13.25/mt on May 29, 2015.
Premiums or discounts for physical bunker fuel reflected the price buyers were willing to pay relative to the published benchmark HSFO values.
Cash differentials for physical fuel oil cargoes represented the price buyers were willing to pay over and above the benchmark HSFO values published around the day a cargo loads.
