After a whole month of Singapore not having any fuel oil imports from the UAE and Saudi Arabia, traders are not holding much hope of an improvement in May given the prevailing lofty freight rates amid Singapore's high inventory of the fuel.

Enterprise Singapore's trade data showed that for four consecutive weeks ended April 29, no fuel oil cargoes were exported to Singapore from either the UAE or Saudi Arabia. The last time Singapore had imported fuel oil from either country was the week of March 26-April 1, when the UAE exported 192,583 mt and Saudi Arabia 1,858 mt of the fuel, the data showed.

"A major reason would be the fact that the freight rate from the Middle East to Singapore is quite prohibitive, and has been so for some time; it's easier to keep cargoes in the region [Middle East]," a Singapore-based trader said.

Platts data showed that the average freight rate for a dirty tanker carrying an 80,000 mt parcel from the Middle East to Singapore was assessed at an average of $24.89/mt in April, 32% higher from the March average, and 54.29% higher than the February average, which is the period when ships carrying fuel oil scheduled to arrive in Singapore in March would have been booked.

The bulk of the fuel oil produced in the Middle East is of high sulfur, on account of the mainly sour crude feedstock used in refineries there.

The restart of the Ruwais refinery, majority-owned by the Abu Dhabi National Oil Co, or ADNOC, in late April was also another reason cited for the absence of fuel oil imports into Singapore in April. The refinery was shut for maintenance in February.

"It takes about three weeks for a shipment to arrive in Singapore from the Middle East, second, there's a lot more fuel oil, both high sulfur and low sulfur in storage in and around Singapore than there was in February or early-March," a trader based in Singapore said.

"Third, with most refiners suffering in this low oil price environment, it'll be interesting to see whether these refineries run at full capacity for long. That's why you're not going to see the volumes we saw coming in the first-quarter, or even March," the trader added.

Traders surveyed by Platts said that at the moment, the volume of fuel oil in floating storage around Singapore stood at approximately 4 million-4.2 million mt, lower than the approximately 5.5 million mt reported at the start of April. Nevertheless, this is still high for a country that sold an average of 3.72 million mt of bunker fuel per month in the first quarter, according to data from the Maritime and Port Authority of Singapore.