Weekly outlook: Asia 0.5%S marine fuel, HSFO

Singapore — The mainstay Singapore 0.5%S marine fuel market was expected to garner support at prevailing levels, if not inch higher by any fair measure, as trading activity picks up for second half May loading cargoes, said traders. The optimism was underpinned by expectations of a drop in arbitrage flows of the IMO-compliant product for May arrival.

Marine fuel 0.5%S

**An easing of the bearish sentiment was reflected in the market structure at the front of the Marine Fuel 0.5%S swaps curve, which was seen trading at steady levels compared with the Asian close Thursday.

**Singapore Marine Fuel 0.5%S May/June swaps spread, which was assessed at minus $8.25/mt at the Asian close Thursday, was pegged unchanged in midmorning trade Monday, broking sources said.

**While stockpiles of low sulfur material in landed and floating storage in and around Singapore have remained unchanged from the previous week at approximately 10 million mt, a drawdown in stocks is likely as the arbitrage volume for May is expected to be sizably lower than for April, said traders.

**The optimism was also underpinned by talks that the end-user bunker market is likely to see steady to a slightly higher demand in April from March.

**Even so, the current supply overhang led Singapore-delivered marine fuel 0.5%S bunker fuel premium to the benchmark Singapore Marine Fuel 0.5%S cargo to touch an all-time low at $7.39/mt Thursday.

High sulfur fuel oil

**On the high sulfur fuel oil cargo side though, the outlook was grim on account of current supply overhang coupled with sluggish demand, said traders.

**Singapore 380 CST HSFO cash differential to the Mean of Platts Singapore 380 CST HSFO assessments plunged to a four-year low Thursday.

It fell $1.68/mt day on day at minus $5.41/mt Thursday, the lowest since October 21, 2015, when it was assessed at minus $5.53/mt, S&P Global Platts data showed.

**The outlook for the week did not look vastly promising either, with the Singapore May/June 380 CST HSFO swap spread trading largely unchanged in morning trade Monday at around minus $5.75/mt, as thin discussions showed only an offer for the spread at minus $5.50/mt, said broking sources.