Asia residual fuels: Key market indicators for Aug 30-Sep 3

Asian residual fuel markets started the Aug. 30-Sept. 3 trading week on a steady to firmer note on more bullish signals from upstream October ICE Brent futures, with indications across the fuel oil complex higher compared to the Aug. 27 assessments.

Discussions for the October ICE Brent futures contract were at $73.03/b at 0300 GMT Aug. 30, up from the $72.16/b level at 0830 GMT Aug. 27, Intercontinental Exchange data showed.

In the Asian high sulfur fuel oil market, heightened September demand in Kuwait has seen supply tighten in the Middle East port of Fujairah, while lower inflows of September-arrival arbitrage cargoes in Singapore are expected to maintain the supply-demand balance of low sulfur fuel oil.

Marine Fuel 0.5%

** Discussions for the Singapore Marine Fuel 0.5%S September/October spread on Aug. 30 rose from the Aug. 27 assessment of $4/mt, with bids for the spread at $4/mt against offers at $4.50/mt, according to Intercontinental Exchange data, after a trade seen at $4.25/mt.

** Lower inflows of low sulfur fuel oil in Singapore in September have widened the front-month backwardation towards the end of August, with flows estimated at approximately 1.9-2 million mt, according to traders surveyed by Platts.

** Contributing to the overall tighter supply profile in Asia is lower production in September in South Korea and Thailand, market traders said.

** Suppliers are not troubled by the declining residual fuel inventories in Singapore, as the waning demand for delivered bunker fuels during the week ended Aug. 27 neutralized the supply-demand dynamics, industry sources said.

** Based on Enterprise Singapore data on Aug. 26, residual stocks in Singapore tumbled to an eight-month low of 21.183 million barrels, or 3.34 million mt, down 4.03% on the week.

** Term contracts for Singapore ex-wharf marine fuel 0.5%S were heard inked around premiums of $4.25/mt above FOB Singapore Marine Fuel 0.5%S cargo assessments for September supply, rising from premiums of $4/mt for balance August loading.

High sulfur fuel oil

** Discussions for the Singapore 380 CST high sulfur fuel oil September/October spread Aug. 30 were stable from the Aug. 27 assessment of $12.75/mt, according to Intercontinental Exchange data. Bids for the spread stood at $12.50/mt against offers at $13/mt.

** Premiums for September supply of Singapore ex-wharf marine fuel 0.5%S and 380CST HSFO firmed up, as independent refineries in China compete against bunker suppliers in Singapore for imports of blending components, industry sources said.

** Meanwhile, offers for September supply of Singapore ex-wharf 380CST HSFO rose to premiums of $4/mt against FOB Singapore 380CST HSFO cargo assessments, compared to premiums around $2-$3/mt concluded on H1 August.

** During the trading week ended Aug. 27, industry sources said that the lukewarm demand for Fujairah-delivered marine fuel 0.5%S depress premiums whereas the Fujairah-delivered 380CST HSFO premiums remain supported amid tightening inventories.

** As of Aug. 27, Platts data showed that the premium of Fujairah-delivered 380CST HSFO to that of FOB Arab Gulf cargo 3.5%S rose to an average of $34.54/mt in August, from an average of $27.43/mt in July.

** In North Asia, while Hong Kong will see sufficient supply of low sulfur bunker fuel oil supply, high sulfur bunker fuel supply is expected to remain tight.

** Hong Kong 380 CST high sulfur bunker supply has tightened due to higher demand from scrubber-fitted ships, market sources said, after dropping its requirement that ships calling at its ports without loading, or discharging cargo, must complete a 14-day quarantine from June 15 under certain conditions.

** However, bunker supply has not increased, a bunker supplier said, with tight supply in Singapore the likely reason. Most of the high sulfur bunker fuel sold in Hong Kong is imported from Singapore, Enterprise Singapore data showed.