Jaslyn Ying of global energy and commodity price reporting agency Argus Media on Wednesday (8 July) published an analysis of the market implications signalled by the recent backwardation of high-sulphur fuel oil in Singapore:
The high-sulphur fuel oil (HSFO) market in Singapore has moved into backwardation for the first time in four months because of surging demand for the fuel as a feedstock for power plants and refineries.
The market moved to a backwardation — with prompt prices at a premium to forward prices — yesterday, when prompt-month July 380cst and 180cst swaps were at premiums of $2/t and $1.50/t respectively to August. The intermonth spread for the HSFO grades was last in backwardation on 3 March.
The market structure has strengthened on signs that regional demand will remain robust throughout the summer because of power generation needs.
Pakistan’s state-owned marketer PSO returned to the spot market at the end of June after a 14-month absence, seeking HSFO for July delivery. PSO this week sought more HSFO for August delivery to Karachi.
State-controlled Saudi Aramco’s trading arm in Singapore, ATS, last month chartered the Aframax Seabravery to load 80,000t of fuel oil from Singapore on 18-20 June to head towards the Red Sea port of Jeddah. Traders expect more HSFO to head towards the Red Sea from Singapore or the straits of Malacca in the coming weeks to meet summer demand for fuel oil as a power generation fuel.
The HSFO market has also found support from a fall in refinery runs, as well as moves by refinery operators to raise production of bitumen at the expense of HSFO yields.
Demand for fuel oil as a residual feedstock at upgrading units in July and August is also rising.
Cuts to term Mideast Gulf crude allocations for Asia-Pacific buyers in June-July have driven refiners to the spot market for residual fuel to feed their upgrading units. South Korean refiners may have already booked July- and August-loading straight-run fuel oil cargoes from the Middle East and boosted their requirements compared to June.
The Singapore 180cst HSFO discount to front-month Dubai crude swaps narrowed to an average of $3.11/bl in June from an average of $4.33/bl in May. The discount was at $3.33/bl yesterday compared to $3.79/bl a day earlier.
Photo credit and source: Argus Media
Published: 9 July, 2020
The representative was providing clarification to a query from Manifold Times when asked if the bunkering licenses of the Hin Leong Trading affiliated company have been permanently revoked.
Patrizia Cosulich becomes first bunker tanker in Singapore to undertake its Mass Flow Meter extension test using the Master Mass Flow Meter, learns bunkering publication Manifold Times.
Bunker claims totalling SGD 628,000 for 88 deliveries of marine gas oil between the period of 7 February 2020 until 15 April 2020, according to documents obtained by Manifold Times.
Event welcomed over 1,100 attendees from 42 countries; delegates visited virtual booths about 4,800 times; while around 5,800 connections were made, according to data from organiser Informa.
Bunker suppliers and bunker craft operators may choose to carry out meter verification using either existing MIMO method OR with the use of a Master Meter.
Pai Kheng Pheng of Sentek Marine & Trading Pte Ltd on Thursday (8 October) was ordered remanded for a further week for investigations, AGC spokesperson informs Manifold Times.