Fujairah April term ex-wharf LSFO premiums mostly steady, demand picks up

Ex-wharf marine fuel 0.5% sulfur bunker cargoes for April-term supplies at the UAE's bunkering hub of Fujairah were inked at premiums in the $6-$10/mt range to benchmark FOB Singapore marine fuel 0.5%S cargo values, mostly steady compared with March-loading cargoes but lower than February-loading cargoes, which were concluded between $10/mt and the mid-teens, traders said April 9.

An uptick in downstream LSFO demand over the past couple of weeks has supported April-term ex-wharf premiums, with some barrels traded closer to the higher end of the range from $8/mt to $10/mt, Fujairah bunker traders said.

Stocks of heavy distillates in the Fujairah hub, consumed as fuel oil for power generation and shipping, dropped to a four-week low of 9.346 million barrels, a 6.3% decline from the previous week, according to the Fujairah Oil Industry Zone.

The upcoming summer season in the Middle East is expected to boost fuel oil stocking activity for power generation purposes, though a significant tightening in inventories for the downstream market is yet to be seen, traders said.

In March, heavy distillates stockpiles hit a three-month high of 10.642 million barrels, rising 15.7% from the start of the month. However, lower cargo replenishment volumes recently have balanced stockpiles, said a Fujairah-based trader.

A replenishment cargo of about 860,000 barrels, or 135,000 mt, of LSFO sourced from Kuwait's Al Zour refinery last landed in Fujairah around March 27, according to industry sources.

Recent LSFO exports from the Al Zour refinery have kept the Fujairah and Singapore markets well-supplied, traders said, pressuring prices in both the upstream and downstream sectors.

The Singapore marine fuel 0.5%S cash differential to Mean of Platts Singapore marine fuel 0.5%S assessment averaged 33 cents/mt over April 1-8, down from an average of $11.58/mt in March, Platts data from S&P Global Commodity Insights showed.

Downstream barge availability for very prompt LSFO refueling dates has been thinner than before recently as traders fix barges for a later date. Sellers were offering slots for at least five to six days out with some sporadic pockets of availability for earlier dates, whereas some of them were even committed to April, bunker suppliers said.

LSFO suppliers in Fujairah have reported tighter barging schedules with some only able to load sometime closer to mid-April, and some others expected the trend to continue in the near term.

Fujairah-delivered marine fuel 0.5% sulfur bunker premiums against FOB Singapore marine fuel 0.5% sulfur cargo values averaged $13.34/mt over April 1-8, easing from an average of $16.55/mt in March, Platts data showed.