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Singapore ex-wharf bunker premium rises to six-year high amid tight supply

Singapore — The Singapore ex-wharf 380 CST bunker fuel premium over the Mean of Platts Singapore 380 CST high sulfur fuel oil assessment rose to a six-year high of $17.82/mt at the Asian close on Wednesday, S&P Global Platts data showed.

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The premium was last higher on February 7, 2012, when it was at $19.04/mt, Platts data showed.

Some bunker suppliers said they were not selling bunker fuel due to a lack of on-specification grades especially for prompt delivery. A tightness in supply of HSFO cargoes has also left the bunker market short, bunker suppliers said.

The tightness in the ex-wharf market also raised delivered bunker premiums. The delivered 380 CST bunker fuel premium to the ex-wharf 380 CST bunker fuel rose to a six-month high of $9/mt at Wednesday's close, Platts data showed. It was last higher on May 7, 2018.

"The premiums were very good for us this week," a Singapore supplier said, adding that the tightness was because most of the buying enquiries were for relatively prompt loading dates such as November 13-17. The large number of enquiries has resulted in a shortage of available berths, raising the delivery premium, the source said. Due to the tightness in available berths, suppliers said they were uncertain if they were able to load for delivery in time, with a little buffer.

According to market participants, supply in the first-half of this month is going to remain tight, but this may ease after replenishment arrive from November 20 onwards.

Apart from the rise in bunker premiums, "the cost of oil is also very high," a trader based in Singapore said, referring to the relatively high price of HSFO at the moment.

The 380 CST HSFO cash differential rose to $11.22/mt on November 2, the highest since June 15, 2015, when it was $11.91/mt, Platts data showed. The cash differential was at $9.36/mt on Wednesday.

"Prompt on-specification [fuel oil] is tight," another trader said.

Singapore's residue stocks have been low compared with last year. The stock stood at 15.456 million barrels as of October 31, the lowest since September 19, latest data from Enterprise Singapore showed. This was down 40.0% from a year earlier, the data showed.

Traders have been giving up their lease of storage tanks, while the hefty high sulfur fuel oil backwardation has discouraged traders from holding stocks.

On the other hand, bunker demand has been relatively steady, bunker traders said.

The inflow of arbitrage cargoes from the West was lower in October than normal months, traders said. The replenishment HSFO cargo will arrive in the second-half of November, fuel oil traders said.

--Jeremiah Yang,

--Atsuko Kawasaki,

--Edited by Norazlina Juma'at,