Asia residual fuel market - Key market indicators this week

Singapore — The Singapore low sulfur fuel oil market opened Nov. 9 largely stable from the end of last week, with the December crack spread to the December Dubai crude swap largely unchanged from the $9.55/b assessment on Nov. 6, brokers indications showed.

On the supply side, weaker middle distillate cracks are expected to depress demand for straight-run fuel oil as a refinery feedstock among Asian low sulfur fuel oil refiners this week, according to trading sources in Singapore. It will also likely keep low sulfur fuel oil production lower for the rest of the year, in spite of a stronger crack spread.

Asian high sulfur fuel oil meanwhile is expected to see the spike in prompt bunker demand wane, according to bunker suppliers in Singapore, although demand from the power generation sector was expected to continue to shore up the crack spread for the rest of the year.

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MARINE FUEL 0.5% SULFUR

** The Singapore Marine Fuel 0.5%S December-January swap spread opened stable Nov. 9 from the Nov. 6 assessment at 65 cents/mt, Intercontinental Exchange data showed.

** Singapore Marine Fuel 0.5%S stocks are currently sufficient to meet about one month of bunker demand, according to traders, but are expected to increase later in November on the inflow of 2 million-2.5 million mt of arbitrage cargoes from the West.

** Singapore's commercial onshore residue stocks edged up 0.1% week on week to 23.228 million barrels (3.66 million mt) in the week to Nov. 4, latest Enterprise Singapore data showed.

** Low sulfur fuel oil supply will be capped in coming months by refineries reducing rates globally due to thin margins, traders said.

** While low sulfur bunker inquiries in the week ended Nov. 6 were lackluster, demand was expected to pick up in the wake of the US presidential election "as volatility in commodity markets in general goes down," a bunker supplier in Singapore said.

HIGH SULFUR FUEL OIL

** The Singapore 380 CST high sulfur fuel oil December-January spread opened Nov. 9 at $1/mt, rising from the Nov. 6 assessment of 70 cents/mt, with bids seen at 85 cents/mt against offers at $1.50/mt, ICE data showed.

** The economics of using straight-run fuel oil has weakened for North Asian refineries due to weaker middle-distillate crack spreads, refiners in the region said.

** Fujairah straight-run fuel oil stocks are rising due to declining demand, according to Middle East traders.

** High sulfur fuel oil demand has increased in Japan amid seasonal requirements and refinery run rate cuts, market sources said.

** Barges in Japan are typically not in operation over Dec. 30 to Jan 3, leading to an uptick in demand in the lead-up to the period, with vessels taking two voyages in November, market sources said.