Asia residual fuel - Key market indicators this week

Singapore — The outlook for the Asia residual fuels market this week was mixed in mid-morning trade Monday.

The imbroglio surrounding embattled oil trader Hin Leong Trading remained a top concern in the broader market, with the impact likely to be more pronounced in the Singapore spot high sulfur fuel oil market than the mainstay IMO-complaint marine fuel market, traders said.

This reflected the way both markets have been impacted since news broke of Hin Leong's financial troubles. Cash differentials for the 380 CST HSFO market have staged a recovery while those for MF 0.5% have languished as structural oversupply weighs on any potential upside in the near term.

MARINE FUEL 0.5%

** The weak sentiment was reflected in the prompt month market structure of the Marine Fuel 0.5% swaps curve, with the Singapore Marine Fuel 0.5% May/June swap spread assessed at minus $11/mt at the Asian close Friday and said by broking sources to be trading lower at minus $11.25-$11.50/mt mid-morning Monday.

** Weighed down by COVID-19 demand destruction and a supply glut, the cash differential for the benchmark Singapore Marine Fuel 0.5% cargo to the Mean of Platts Singapore Marine Fuel 0.5% assessment has progressively sunk to a discount of $15.49/mt at the Asian close Friday from a premium of 40 cents/mt at end March, S&P Global Platts data showed.

** The end-user bunker market was expected to remain relatively supported this week, with demand for IMO-compliant marine fuel supported by traders looking for replacement deliveries after Hin Leong's bunkering arm, Ocean Bunkering Services, cancelled all bunker fuel deliveries from April 18.

** The Singapore-delivered Marine Fuel 0.5% bunker premium to Singapore Marine Fuel 0.5% cargo firmed to $29.13/mt Friday from a record low of $7.39/mt on April 9, Platts data showed.

HIGH SULFUR FUEL OIL

** The Singapore HSFO market was expected to trade steady to slightly firmer this week due to a relatively lower availability and far fewer companies in the HSFO market since the transition to cleaner marine fuel on January 1, traders said.

** This sentiment was reflected in the front month market structure in mid-morning trade Monday, with the Singapore May/June 380 CST HSFO swaps spread pegged at stable to slightly higher than Friday's assessment at minus $11/mt Friday, broking sources said.

** The cash differential for Singapore 380 CST HSFO over MOPS 380 CST HSFO extended its uptrend to be assessed at minus $5.18/mt Friday, the highest since April 8, supported by strong Singapore delivered bunker premium to the 380 CST HSFO cargo assessment.

** Mainstay Singapore-delivered 380 CST bunker fuel was being supported by tightness in the barge market after the exit of Ocean Bunkering Services, sources said. The Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo was assessed at $35.82/mt Friday, firming from a 7-week low of $12.24/mt on April 6, Platts data showed.