Singapore ex-wharf bunker fuel term prices fall into discount for September


Singapore 380 CST bunker fuel term contracts for September have been concluded at as low as a discount of 50 cents/mt to the Mean of Platts Singapore 380 CST high sulfur fuel oil assessments on an ex-wharf basis -- the first time the differential has been in negative territory in at least 10 years -- traders said Thursday.

The September contracts were concluded in a relatively wide range, with the top end of range seen at MOPS 380 CST HSFO assessments plus $2.50/mt.

The deals which were concluded at a discount of 50 cents/mt were heard negotiated this week, following a sharp fall in the spot market last week.

The Singapore ex-wharf bunker fuel spot differential to MOPS 380 CST HSFO assessments flipped from a premium $1.80/mt on August 22 to a discount of $1.15/mt on August 23 -- its lowest level in 40 months -- as sellers tried to clear supplies given the weak demand seen so far in August.

In comparison, bunker fuel term contracts for August were concluded at premiums of $2.25-4/mt to MOPS 380 CST HSFO assessments. The differential is the price buyers are willing to pay for bunker fuel above or below published benchmark values published around the day a cargo loads.

Bids for September contracts were initially heard at premiums of $2/mt last week, but fell to as low as discounts of $2/mt this week, said traders.

"September will be a bloodbath," said one trader, adding that bunker fuel suppliers will also be lowering their offers in an attempt to revive demand.

Supply remains ample, with Western arbitrage arrivals in September expected at around 3 million mt, which will add to already-full tanks in Singapore due to weak demand for August so far, said traders.

Most of the oil that is arriving will be high density, high viscosity fuel that is suitable for use in the bunker market, said traders. October supply, meanwhile, is expected to be around 3-4.5 million mt, sources said.

Source from : Platts