Singapore-delivered low sulfur bunker premium at all-time high on tight prompt availability
23rd June 2022 13:14 GMT


The premium for IMO-compliant marine fuel delivered at Singapore June 22 surged to an all-time high on tight availability of finished bunker grade material, especially for prompt delivery.


Singapore-delivered marine fuel 0.5%S bunker premium over benchmark Singapore marine fuel 0.5% cargo surged $10.84/mt day on day to $108.58/mt, the highest since the assessment was launched on July 1, 2019, S&P Global Commodity Insights data showed. The differential was last higher at $106.97/mt on June 3, S&P Global data showed.

Going into the last trading week of the month, there were very few sellers who apparently had any oil to offer against still-available spot market inquiries for June delivery product, traders said.

A steeply backwardated low sulfur fuel oil market structure had meant that most, if not all, sellers had already moved to offering July delivery product. The backwardation at the front of the Singapore marine fuel 0.5% swaps curve has averaged $48.86/mt so far this month, up from May's average of $36.82/mt, data showed. The Singapore July/August marine fuel 0.5% swap spread rose $1.25/mt day on day to be assessed at $59.75/mt on June 22.

Singapore-delivered marine fuel 0.5%S bunker was offered at a wide range of $1,060-$1,100/mt on June 22, with offers at the lower end of the range for product deliverable from July 2 onwards, while offers at the higher end of the range were for product deliverable for end-June dates.

Any seller who still had oil -- and barging slots -- available to offer against the few inquiries that still trickled in for bunker deliverable in June, was potentially benefiting from a seller's market, traders said.

Even as tight availability of low sulfur material has remained a widespread issue globally, the situation has been exacerbated in the downstream end-user bunker markets, especially going into the last decade of the month, as sellers tend to minimize stocks due to a significantly backwardated market structure.

This has indeed been the situation in the Middle Eastern bunkering hub of Fujairah as well, where the delivered premium for marine fuel 0.5%S bunker over Singapore marine fuel 0.5% cargo has skyrocketed from $44.12/mt at the start of the month to touch an all-time high for the second consecutive day on June 22, when the differential was assessed at $138.58/mt.

Bunkerworld ,
23rd June 2022 13:14 GMT