The discount of delivered very-low sulphur fuel oil (VLSFO) in Fujairah relative to Singapore is narrowing again, after widening to an average of $20/t last week.
Singapore VLSFO bunkers cost more than Fujairah bunkers during the Christmas week, with fewer cargo availability given strong power demand for the fuel, a lack of blending components and more market participants away.
Argus understands that supply pressure is easing in Singapore, especially with oil majors and large trading houses “offering quite aggressively”, according to a bunker broker. Local suppliers were less willing to lower prices.
Bad weather in Fujairah was heard to have impacted bunker operations temporarily. Cargo availabilities are getting delayed and barges are tight.
As a result, pricing in Fujairah has turned into a two-tiered structure. The price spread between VLSFO clips for delivery before and after 11 January widened to up to $20/t, reflected in deals submitted by market participants to Argus for price assessment. The highest deal, agreed on 4 January for delivery of around 500t of VLSFO by 11 January was at $635/t, while a 1,000t clip of VLSFO was sold at $614/t for 14 January delivery.
Higher supply in Singapore and tighter supply in Fujairah narrowed the discount of Fujairah bunkers versus Singapore to just $2.98/t yesterday, according to Argus data, in line with the longer-term average.
By Sammy Six and Elshan Aliyev
Photo credit and source: Argus Media
Published: 6 January, 2022
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