BUNKERWORLD INDEX: Bullish supply conditions ahead at some key ports
5th March 2021 13:55 GMT

Major bunker hubs may see instances of bullish supply fundamentals in the days ahead, amid conflicting signals from the wider oil complex.

The BW 0.5%S index ended March 4 at $512/mt, up $7/mt on the day but down $12/mt on the week. Compared with a month earlier the index is now $48/mt higher.

The BW380 index, which represents value for 3.5% sulfur fuel oil, was $7.50/mt higher on the day but $7/mt lower on the week and $33.50/mt higher than 30 days previously.

Bullish sentiment in the oil market has been held back slightly by appreciation in the US dollar, which has made crude more expensive for buyers holding other currencies.

"Rising treasury yields and safe haven demand has pushed the US dollar up, and a risk-off sentiment has gripped the markets," Pan Jingyi, senior market strategist at IG, told S&P Global Platts March 5.

Support may come from OPEC+ maintaining current production levels through April, rather than rolling backs cuts as had been widely expected.

In the Singapore bunker market, ready availability of 3.5%S FO and continued bunker calls by ships, particularly container ships fitted with scrubbers, is likely to support consumption of the grade and quell fears of a drastic decline in its demand in the city-port after the International Maritime Organization's 2020 global sulfur mandate.

According to an industry consultant, Singapore has a lot of container demand and the lack of 3.5%S FO in other small and medium sized ports at times has helped Singapore boost its sales. The relatively fast recovery from the pandemic in Asia, China in particular, has also been positive for bunker fuel sales, he added.

Singapore's 3.5%S FO sales in January gained 47.9% year on year to reach 1.13 million mt, while its share in the port's total bunker sales for January stood at 25.1% compared with 16.9% a year ago, latest data from the Maritime and Port Authority of Singapore showed.

The short-term demand outlook for bunker fuels at Singapore is subdued as the rise in flat prices keeps buyers on the sidelines. While there is no supply tightness, premiums should be supported in the short term as arbitrage arrivals for March are expected to arrive in the second-half of the month.

Availability of 0.5%S FO at Rotterdam, the Netherlands, is expected to be tight for the next two weeks, bunker suppliers said. “Worldwide, I think the market is still short 0.5%S FO. [There is] not enough production and blending components,” one trader said.

In the US Gulf Coast, some market players are monitoring the wholesale marine fuel market amid talk of short supply and congestion issues. The spread between Houston and New Orleans was heard widening as a result, with the latter seeing a more pronounced impact on supply.

The BW Indexes are weighted daily indexes made up of assessments at 20 key bunkering ports. To obtain a representative geographical spread, the ports were selected by size with reference to their geographical importance.

The BW0.5%S Index ports are Hong Kong, South Korea, Shanghai, Singapore, Japan, Las Palmas, Durban, Fujairah, Gibraltar, Piraeus, Rotterdam, St. Petersburg, Houston, Los Angeles, New York, Balboa and Santos.

The BW380 Index ports are Busan, Canary Islands, Colombo, Durban, Fujairah, Gibraltar, Hong Kong, Houston, Los Angeles, New York, Offshore Nigeria, Panama Canal, Piraeus, Rotterdam, Santos, Shanghai, Singapore, St. Petersburg, Suez and Tokyo.

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Bunkerworld .,
5th March 2021 13:55 GMT