Singapore—Asia's high sulfur fuel oil market is looking slightly more optimistic for the week of May 10-14, traders in Singapore and Fujairah said, as sentiment is still buoyed by regional procurement tenders to meet power demand. The market is keeping a close eye on Saudi Arabia increasing its purchase of HSFO to meet its domestic power generation demand, a trader based in Fujairah said.
The region's low sulfur fuel oil market will likely grapple with weak downstream demand at its two largest bunkering ports of Singapore and Fujairah this week ending May 14, according to bunker suppliers at both ports, despite lower incoming LSFO supply and low stocks in storage, respectively.Marine Fuel 0.5% sulfur**The Singapore Marine Fuel 0.5%S May-June contango early May 10 was rangebound, with no bids seen against offers at $3/mt, Intercontinental Exchange data showed.
**The Singapore Marine Fuel 0.5%S market is expected to remain weak amid high inventories, and a lower inflow of arbitrage cargoes from the West in May compared with April.
**Apart from landed terminals, volumes of low sulfur fuel oil and its components in floating storage around Singapore are approximately 3 million mt, market sources said, giving the market sufficient supply.
**It is uncertain when downstream bunker demand will pick, bunker suppliers said, as the second-quarter is typically a quiet period.
**Platts data showed the spread for Fujairah-delivered marine fuel 0.5%S against the same Singapore-delivered grade, flipped into positive territory on May 5, closing at $1/mt on May 7.
**However, there is a lack of optimism among local traders as Fujairah has been struggling with low offers, as bunker suppliers are keen to draw down stocks.
**Despite S&P Global Platts and Fujairah Energy Data Committee showing a 1.5% week on week decline in Fujairah's heavy residual stocks to 14.854 million barrels on May 3, bunker suppliers highlighted that subpar demand for bunker fuels is still keeping the market oversupplied.
**Weak bunker demand in Singapore has left buyers, who had fixed term contracts in April, rolling these volumes to May, Singapore-based traders said. However, the oversupply was not homogeneous across the market.
**Some bunker suppliers were less eager to sell their cargo on ex-wharf basis at current levels and preferred to wait for prices to rebound, market sources said.
HIGH SULFUR FUEL OIL**According to brokers' indications and ICE data, the Singapore June high sulfur fuel oil viscosity spread was narrower early May 10 from the Platts May 7 Asian close assessment of $5.40/mt, with bids at $5.25/mt against offers at $5.50/mt.
**While the 380 CST high sulfur fuel oil market is expected to strengthen in Q2 as Saudi Arabia starts to increase HSFO purchases for its power and desalination plants, the HSFO 380 CST cash differential weakened in the first week of May. The differential slumped to minus 29 cents on May 7, the lowest since Dec. 31, 2020 when it was assessed at minus 75 cents/mt.
**The 180 CST cash differential dropped to 17 cents/mt on May 7, the lowest since Feb. 24, when it stood at 11 cents/mt, Platts data showed.
**Platts data showed that the premium for Singapore-delivered 380 CST HSFO hit near a two-year low at $4.24/mt on May 7, just above the $4.19/mt on May 16, 2019.
**Although market sources said the delivered 380 CST market has been "quite depressed" recently, most shipowners have yet to cover demand for Q3.
**Given some outstanding HSFO tenders, market sources see some upside for HSFO demand going forward. A trader said the high inventories and weak spot demand pose a downside risk to this view, even though suppliers are floating competitive offers to up sales.
