Singapore marine fuel 0.5%S cash differential hits all-time high on shortage
30th May 2022 10:02 GMT


The cash differential for Singapore marine fuel 0.5%S cargoes against Mean of Platts Singapore strip hit a fresh record high of $62.25/mt on May 27, up $12.01/mt from May 26, S&P Global Commodity Insights data showed, amid a shortage of the finished product.


The cash differential hit the record high level for two days in a row, the data showed.

"There is not enough oil. Regional production is not increasing. Blending is difficult," said a fuel oil trader based in Singapore.

Singapore's bunker demand is about 2 million-2.5 million mt/month, while the demand is typically met by arbitraged cargoes from the West.

Singapore has been receiving a lower volume than its demand for several months. The bunkering hub is estimated to receive 1.6 million-1.9 million mt of low sulfur fuel oil from the West in June, similar to levels in April and May, when 1.5 million-1.8 million mt of LSFO cargoes were expected to arrive, fuel oil traders said.

LSFO supply tightened in Europe amid higher gasoil crack spread. Blending stocks to produce low sulfur fuel oil, such as vacuum gasoil and light cycle oil, are taken by the gasoil market, market sources said.

Tight LSFO supply in Europe narrowed the East-West spread, which led to a low inflow to the East.

Steeply backwardated markets discourage arbitrage because of the risk of having to price against a further out month in the event of vessel delay. The front-end time spread also hit a record high on May 27 for two days in a row with the June-July spread assessed at $61.50/mt, up from $50.05/mt on May 26, according to S&P Global data.

The prices in the downstream bunker market have surged on supply tightness amid steady demand. The Singapore delivered marine fuel 0.5%S premium over benchmark Singapore cargo was assessed at a 28-month high of $91.31/mt May 27, the highest since Jan. 13, 2020, when it stood at $92.17/mt.

Offers in the ex-wharf market ranged from $90/mt-$100/mt for June loading cargoes. "Even at these levels, I am unable to get firm offers as cargo [supply] is so limited," said a bunker trader.

The spread between marine fuel 0.5%S and 380 CST high sulfur fuel oil widened to an all-time high of $355.94/mt May 27 as well due to strong marine fuel 0.5%S and plunging 380 CST market. The spread was last higher at $327.47/mt on Dec. 26, 2019, S&P Global data showed.

Bunkerworld .,
30th May 2022 10:02 GMT