Asia residual fuels: Key market indicators for May 17-20
17th May 2022 13:40 GMT

The Singapore marine fuel oil market is expected to remain firm in the May 17-20 trading week, as tight availability of cutter stocks persist given relatively stronger gasoil crack spreads compared with low sulfur fuel oil.

On the other hand, high sulfur fuel oil prices are likely to continue to face downward pressure as contamination issues in the region gradually ease the earlier supply tightness coupled with the possibility of an inflow of Russian barrels into Asia.

Crude oil futures was higher during morning trade in Asia May 17, with July ICE Brent at $113.85/b at 11 am Singapore time, up from $109.56/b at the Asian close on May 13.



Marine fuel 0.5%S


** Marine fuel 0.5%S market structure was firm during the Asian morning May 17 as the June-July spread was pegged at $31.75/mt 11 am Singapore time, up from $25.75/mt on May 13.

** The downstream bunker market was likely to remain steady this week, after surging May 13 due to higher crude oil prices.

** While demand from shipowners is reportedly strong due to a slew of new fixtures done for loading after May 18, sellers reported that higher freight rates had resulted in owners preferring to take bunker fuel at ports they are already berthed for.

** Availability of finished grade product for delivery on a prompt basis eased slightly. The premium for Singapore-delivered marine fuel 0.5%S bunker to benchmark Singapore Marine Fuel 0.5%S averaged $31.78/mt in the week ended May 13, down $2.07/mt from the previous week's average of $33.85/mt.

** Limited availability of prompt delivered marine fuel 0.5%S in South Korea is likely to buoy bunker premiums amid fewer spot offers and above-average demand, as some suppliers have reportedly oversold for May deliveries, traders said.

** Rising inflows of replenishment LSFO cargoes is expected to cap Hong Kong's bunker premiums for the rest of May, while upstream tightness in April led sellers to secure more spot ex-wharf marine fuel 0.5%S parcels during May to cover for downstream requirements, market sources said.



High sulfur fuel oil


** High sulfur fuel oil prices are likely to remain under pressure from easing contamination issues in Singapore and a potential uptick in cargo inflow from Russia.

** Strong demand for 180 CST HSFO from South Asian buyers, like Pakistan and Bangladesh, is likely to continue as they head into summer months, fuel oil traders said.

** Tight availability of high sulfur marine fuel for delivery in Singapore could ease due to higher imports expected next month due to a potential inflow of Russian cargoes

** More bunker suppliers in Hong Kong are resuming offers for spot delivered HSFO bunkers during second-half May amid rising cargo availabilities, though premiums are likely still supported by lean inventories, local suppliers said.

** Although traders expect HSFO demand from utility sectors to cap Japan's inventory levels, strengthening demand for spot HSFO bunkers in May is mostly met with healthy cargo availabilities.

Platts ,
17th May 2022 13:40 GMT