Singapore—The Asian fuel oil market in the week of Nov. 23 is expected to see a pick-up in demand in Singapore for high sulfur bunker fuel, as shipowners look to stock up on December inventory, bunker suppliers said. On the other hand, demand for low sulfur bunker fuel in Singapore is expected to remain stable.
MARINE FUEL 0.5% SULFUR** The Singapore Marine Fuel 0.5%S December-January timespread narrowed slightly to $2.25/mt Nov. 23 morning from the Nov. 20 assessment of $2.50/mt, brokers' indications and Intercontinental Exchange data showed.
** Amid improving margins, some Asian refiners have indicated a gradual rise in low sulfur fuel oil production rates in December, although the increase in some cases is not likely to exceed 5% over current levels.
** The average November crack spread so far between the Singapore Marine Fuel 0.5%S swap and the Dubai crude swap is $9.97/b, $1.22/b higher than the October average, S&P Global Platts data showed.
** In North Asia, supply in Hong Kong is expected to be tight going into December, as oil majors cut down on cargo imports on year-end stock-taking.
** While demand remains weak due to the quarantine rule for non-cargo working ships, there is still baseline bunker demand from container liners.
** The Hong Kong delivered Marine Fuel 0.5%S differential to FOB Singapore 10 ppm gasoil cargo assessments rose $3.93/mt week on week to minus $5.59/mt Nov. 20, Platts data showed.
** In South Korea, supply was tight for fuel oil, especially the high sulfur grade. Only very small volumes are offered on a spot basis, and suppliers are now offering for December loadings.
** The Busan/Ulsan delivered 380 CST high sulfur bunker fuel differential to FOB Singapore HSFO cargo assessments rose $6.37/mt week on week to $49.34/mt Nov. 20, Platts data showed.
HIGH SULFUR FUEL OIL** The Singapore 380 CST high sulfur fuel oil December-January timespread opened Nov. 23 morning stable from the Nov. 20 assessment of $4/mt, with bids seen at $2.30/mt against offers at $4.25/mt.
** Straight-run high sulfur fuel oil supply from the Middle East in the first quarter of 2021 is expected to exceed supply in the fourth quarter, amid tepid domestic demand from power generation plants in the region, according to refiners.
** The excess supply of straight-run fuel oil is expected to widen the crack spread from middle distillates, stimulating demand once again from low sulfur fuel oil refiners in North Asia who previously purchased it as refinery feedstock, according to fuel oil traders in Singapore.
** The Singapore delivered 380 CST bunker fuel premium to FOB Singapore 380 CST HSFO cargo was expected to trade in the high-teens as trading picks up for December delivery product, traders said.
**The Singapore delivered 380 CST bunker fuel premium has averaged at $19.60/mt so far this quarter, compared to $17.86/mt in the previous quarter.
