Asia residual fuels: Key market indicators for March 21-25

Low sulfur fuel oil supply in Singapore is expected to remain tight in the week of March 21-25, as cargo inflows have been relatively weak in the last few months.

The Russia-Ukraine conflict has little to do with the Asian LSFO market because Russian fuel oil typically contains more than 2% sulfur, and it hardly goes to a low sulfur fuel oil blending pool, market sources said.

Meanwhile, the conflict raised tanker freight rates. "The arbitrage window closed even more," said a fuel oil trader based in Singapore.

Crude oil futures opened higher on March 21 in Asia, with May ICE Brent trading at $111.08/b at 0300 GMT, up from $108.47/b at the 0830 GMT Asian close on March 18.

Marine fuel 0.5%

** S&P Global Commodity Insights data showed that the cash differential to the Mean of Platts Singapore Marine Fuel 0.5% assessment surged to $24.61/mt on March 18, the highest since Feb. 6, 2020, when it was assessed at $25.54/mt.

** The Singapore Marine Fuel 0.5%S April/May swaps spread was stable March 18 from the March 11 assessment, pegged at $28/mt, according to brokers.

**Price swings are expected to weigh on downstream low sulfur fuel oil bunker demand in Singapore, while lackluster barge spreads in low single-digit pressure suppliers, despite rising gasoil prices increasing the cost of operations, market sources said.

**Spreads between the Singapore delivered and ex-wharf marine fuel 0.5%S grades averaged $1.06/mt below the previous quarter at $5.45/mt during the first quarter through March 18, S&P Global data showed.

**Suppliers of the International Maritime Organization-compliant bunker fuel at Fujairah are likely to grapple with tight inventories for the rest of March, shoring up premiums of both the delivered and ex-wharf marine fuel 0.5% grades, according to local traders.

**Market participants at Fujairah said they were yet to see demand shift to other ports, in response to high price of Fujairah-delivered marine fuel 0.5%S, such as Singapore and Zhoushan, although some traders said they are expecting that in the next few weeks.

**Supply of marine fuel 0.5%S is expected to remain short in Japan for March deliveries, as its two largest suppliers ENEOS and Idemitsu have stopped accepting fresh nominations for March due to refinery glitches.

High sulfur fuel oil

**The impact from the Russia-Ukraine conflict is yet to emerge in the Asian high sulfur fuel oil market. US refiners are looking for alternatives to Russian materials in the Middle East, traders said. Singapore, however, still has sufficient supply to meet demand, said a fuel oil trader.

**S&P Global data showed that the cash differential to the MOPS 180 CST HSFO assessment rose to $7.89/mt March 18, up $1.64/mt on the day, while the 380 CST cash differential rose to $4.83/mt March 18, up 58 cents/m on the day.

**Buying interest for April term Singapore ex-wharf 380 CST HSFO parcels was heard more subdued compared to March, traders said.

**Singapore-based bunker suppliers are seeing tepid spot demand for HSFO bunkers amid strong bunker prices, while shipowners are mostly inquiring for smaller parcels for prompt delivery dates.

**Ample stockpiles softened premiums for balance March term contractual supply of Fujairah ex-wharf 380 CST HSFO, inked between $3/mt and minus $2/mt to the FOB Arab Gulf 180 CST HSFO cargo assessment, below the $4-$6/mt premiums done for whole-month March term supply.