Asia residual fuels: Key market indicators for Jan 24-28
25th January 2022 01:57 GMT

Supply tightness in Asian marine fuel 0.5%S market is expected to remain due to a lack of blending components until the first half of February, traders said Jan. 24. The tightness, however, is likely to ease in the second half of February as at least one cargo of Skikda crude and one of sulfur cutter stocks, is going to arrive in Asia.

The Asian high sulfur fuel oil market reflected strength going into February, with Russian M-100 fuel oil, typically used as a blending stock in low supply.

At 0300 GMT Jan. 24, the March ICE Brent futures contract was trading at $88.65/b, jumping from $86.66/b recorded at the 0430 pm Singapore time Asian close on Jan. 21, Intercontinental Exchange data showed.

Marine fuel 0.5%S

** Despite continuing tight availability of low sulfur blending components, traders expect the arrival of at least one cargo of Skikda crude shipped on the 'Astro Sculptor' to arrive in H2 February in Singapore, and ease the situation next month.

** In the short term though, concerns remain over sufficient availability of components over first half February, reflected in the widening spread between the Singapore marine fuel 0.5% February-March spread, which was assessed at a backwardation of $15.75/mt Jan. 21, Platts data showed.

** In the downstream bunker market, heightened trading activity of Singapore ex-wharf marine fuel 0.5%S for January balance month parcels is anticipated by market participants, as upstream suppliers seek to clear balance inventories before February, Singapore-based traders said.

** The snowballing backlog of LSFO bunker deliveries in Fujairah is expected to fill barge schedules, as the severe weather events ongoing since Jan. 14 encumbered barge refueling and disrupted bunker deliveries, according to local bunker suppliers.

** January's LSFO bunker sales in Fujairah are likely to stay supported however, amid bunker suppliers' eagerness to move oil cargoes amid the high flat price environment which led to competitive offers for Fujairah-delivered marine fuel 0.5%S heard across the week ended Jan. 21, market sources said.

** At North Asian ports, demand is expected to continue to rise as the Lunar New Year draws near.

** Persistent berth congestion and barge limitations amid robust demand are expected to keep premiums elevated at Japanese ports.

** Cargo delays at the port of Hong Kong could tighten supply in the short term.


** Despite enjoying relatively stable demand from the downstream bunker sector and power generation sector, traders noted the low availability of Russian M-100 fuel oil, a popular sulfur cutter, as underpinning the bullishness in the FOB Singapore 180 CST HSFO market.

** "There are stocks [of HSFO] available, but a lot of it is off-spec, and we'd usually use 2.7% sulfur fuel oil from Russia to cut it, but there's not much that's been coming lately," said a Singapore-based trader.

** Buyers of Singapore-delivered 380 CST high sulfur fuel oil are likely to face limited availability of prompt HSFO bunker delivery slots, as the slight shortage of blending components cap stockpiles, local traders said.

** Some downstream bunker suppliers are grappling with tight HSFO supplies in Fujairah amid loading disruptions as the rough weather conditions prolong, Fujairah-based bunker suppliers said.

** The tightening barge availability is only expected to ease late into the week started Jan. 24, while prompt delivery of Fujairah-delivered 380 CST HSFO is made accessible albeit at steep premiums, traders said.

** High sulfur bunker fuel supply tightness in Hong Kong is not expected to ease as local importers have maintained their cuts of cargo import volumes.

Bunkerworld ,
25th January 2022 01:57 GMT