Asia residual fuel market: Key market indicators this week

Singapore — The Singapore Marine fuel 0.5%S bunker demand is expected to dip over Feb. 1-5, ahead of the Lunar New Year holidays, after the uptick in the second half of January, traders said, even as the North Asian power sector demand for Singapore Marine Fuel 0.5%S cargoes peter.

The Asian high sulfur fuel oil market continues to grapple with lackluster demand, although North Asia remains a bright spot as tight supply ensures that the market remains robust, traders said.

MARINE FUEL 0.5% SULFUR

** The Singapore Marine Fuel 0.5%S balance February-March backwardation Feb. 1 deepened to $5/mt from the $4.80/mt assessment at the Asian close on Jan. 29, with bids at $4.75/mt against offers at $7/mt, data from brokers and the Intercontinental Exchange showed.

** Premium for Singapore-delivered marine fuel 0.5%S bunker over FOB Singapore marine fuel 0.5%S cargo assessments inched higher to $15.02/mt on Jan. 29, the highest since Jan. 4 when it was assessed at $15.40/mt. This was due due to bullish sentiment for Singapore marine fuel 0.5%S cargoes.

** Singapore low sulfur marine fuels is seen steady at prevailing levels as trading activity picks up for February delivery, traders said.

** Demand is unlikely to be robust due to the upcoming Lunar New Year holidays when trading activity dials down a notch, bunker suppliers based in Singapore said.

** Incremental demand for LSFO as a burning fuel is seen tapering going into February as compared with January when buying by North Asian utilities was robust. As such, the prevailing supply short is likely to correct and become balance, a trader said.

** In Fujairah, there was a lack of demand for most of January, despite hopes that some of Qatar's bunkering demand will return to Fujairah.

HIGH SULFUR FUEL OIL

** According to brokers' indications and ICE data, the Singapore HSFO viscosity spread for March stood at $5.25/mt early Feb. 1, wider than the Jan. 29 assessment of $4.55/mt.

** The Singapore HSFO market has yet to recover as demand is lackluster, traders said, as Saudi Arabia, a major buyer of Singapore HSFO, was not active. "Saudi Arabia seems to have a bit more to sell," a fuel oil trader said.

** Despite Kuwait and Bangladesh continuing to buy HSFO to meet their domestic power sector demand, their purchases are unable to support the market, sources said.

** Tight supply of high sulfur bunker fuel in Japan due to an uptick in demand and competing demand from power plants is expected to support higher premiums, traders based in Japan said.

** The Tokyo Bay-delivered 380 CST high sulfur bunker fuel premium over FOB Singapore 380 CST high sulfur fuel oil cargo assessments averaged $52.89/mt in the week ended Jan. 29, up $8.11/mt from the previous week's average of $44.78/mt, Platts data showed.