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Tight low sulfur fuel oil stockpiles firm up Dec Singapore ex-wharf bunker premiums
14th December 2021 13:53 GMT

 

Term contractual supply for the balance of December ex-wharf marine fuel 0.5%S parcels was heard offered at $20-$30/mt premiums over the FOB Singapore marine fuel 0.5%S cargo assessments, traders said, amid low inventories and above the $10-$18/mt premiums offered for November term supply.

 

“The tightness in low sulfur fuel oil cargo availability is expected to extend into January next year. Some downstream bunker suppliers were heard to have only small quantities of ex-wharf parcels on hand to sell, while cargo owners are prioritizing supply to their own bunker barges,” a Singapore-based bunker supplier said Dec. 14.

A second bunker supplier said that buyers who could not secure prompt ex-wharf loadings are expected to place barges in queue for longer durations due to the scarcity of readily available low sulfur fuel oil cargos.

Buyers’ appetites remain subdued as the latest offers for term contractual supply for balance of December ex-wharf marine fuel 0.5%S parcels were heard at $20-$25/mt premiums over the FOB Singapore marine fuel 0.5%S cargo assessments, according to traders Dec. 14.

“As demand [for Singapore-delivered marine fuel 0.5%S] has been lukewarm, delivered margins are under pressure…So, ex-wharf buyers opt to purchase spot ex-wharf cargoes to meet their requirements and minimize their exposure, rather than committing to term ex-wharf supplies at the exorbitant premiums,” a Singapore-based trader said.

The first bunker supplier also said that buyers paying up the prevailing ex-wharf premiums “run the risk” of selling delivered bunkers below cost, while it would be more prudent to hold off amid the steep backwardation.

The Singapore marine fuel 0.5% has been widening since November with the December-January backwardation assessed at $12.75/mt Dec. 13, Platts data showed, upon a slowdown in cargo inflows for December and likely in January too, market sources said.

Term contractual supply for the balance of November ex-wharf marine fuel 0.5%S parcels done around H1 November was heard concluded at $8-$10/mt premiums, whereas term supply for December ex-wharf was inked at $14-$15/mt during the same period, according to traders.

Initial discussions for January ex-wharf term contractual supply were for offers at $13-$18/mt premiums, while the market expects more offers during H2 December as upstream suppliers seek to secure more cargoes amid clearer pricing cues, traders also said.


Platts ,
14th December 2021 13:53 GMT