Asia residual fuel - Key market indicators this week

Singapore — The Asian residual fuels market is likely to garner support at prevailing levels on expectations of lower arbitrage arrivals into Singapore. But focus within the market is expected to remain fixed on the embattled Singapore oil trader Hin Leong.

Last week the Singapore Marine fuel 0.5% cash differential to the Mean of Platts Singapore MF 0.5% assessment fell to a seven-month low, but signs emerged towards the end of the week of an improvement in outlook for low sulfur fuel oil.

MARINE FUEL 0.5%S

- Singapore Marine Fuel 0.5%S market was seen trading steady to slightly higher in mid-morning trade Monday from its Asian close Friday. The prompt month Singapore Marine Fuel 0.5%S swaps spread, which was assessed at minus $8.75/mt last Friday, was said to be trading slightly higher at minus $8.50/mt in the OTC markets, broking sources said.

- Total fuel oil imports of 1.26 million mt per week over the first two full weeks of April, spanning April 2-15, showed a 20.6% drop compared with the imports over the equivalent period in March 5-18, data from Enterprise Singapore showed. A draw in stocks was a precursor to expectations of lower arbitrage arrivals in April and May, traders said. Market sources estimated April arbitrage volume to be between 2 million-2.5 million mt, down from approximately 3 million mt in March.

- News emerging around Singapore oil trader Hin Leong's financial turmoil has done its bit to spook the market, which has led to premiums for the end-user Marine Fuel 0.5% bunker to inch back up over the course of last week, a trend that is expected to continue in the ensuing days.

- Singapore delivered Marine Fuel 0.5% premium to benchmark Marine Fuel 0.5% cargo, which had slumped to an all-time low of $7.39/mt on April 9, firmed up progressively over the course of the week to settle at $14.11/mt on Friday, Platts data showed.

- Hin Leong's bunkering arm, Ocean Bunkering Service, which the Maritime Ports Authority of Singapore has ranked as the country's top three bunker suppliers, has cancelled all of its bunker fuel deliveries from April 18, S&P Global Platts reported last week, quoting Hin Leong's counterparties and traders.

- With OBS out of the market, traders expect the Singapore delivered spot bunker market to tighten.

HIGH SULFUR FUEL OIL

- In a week which ended with the Singapore HSFO 380 CST cash differentials dropping to a multi-year low of minus $10.33/mt, the weak demand and ample supply fundamentals are expected to see the cash differentials stay firmly in negative territory.

- Reflecting a weak market sentiment, the market structure at the front of the Singapore 380 CST HSFO swaps curve was said to be trading lower in mid-morning trades Monday. According to broking sources, front month Singapore 380 CST HSFO swaps spread was heard trading lower at minus $10/mt in mid-morning trades as compared to the assessment of minus $9.25/mt at the Asian close on Friday.

- The chaos from the financial muddle that OBS is embroiled in currently would help support premiums in the near term for the end-user bunker market though, traders have said.

- Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo has progressively firmed up from a 6-week low of $12.24/mt on April 6 to be assessed at $26.90/mt Friday, Platts data showed.