Trading in Singapore’s physical and paper fuel oil markets remained relatively subdued on Tuesday as most market participants were holding off until a clearer market direction develops, traders said.

“A lot of people are on the sidelines waiting to see if the market will get bullish due to tighter supplies, or if supplies are replenished and the market goes bearish,” said a Singapore-based trader.

Market participants largely expected fuel oil supplies in Singapore to contract from July as a result of fewer incoming supplies, but that has so far failed to materialize as huge volumes of the fuel stored in vessels around Singapore waters from the March play were brought onshore.

On the Intercontinental Exchange (ICE), the 380-cst Sept/Oct time spreads slipped to parity to Singapore quotes from Monday’s premium of 25 cents a tonne, with only 85,000 tonnes equivalent in contracts being traded by 0930 GMT, industry sources said.

In the physical markets, trading activity was also limited because “supplier offers are still pretty high for buyers,” said another Singapore-based trader.

“Higher cash differentials help keep the arbitrage window open and once suppliers lock in their arbitrage cargoes, then we’ll probably see offers start to come down,” the trader said.

Only one cash deal was reported in the Platts window with Shell buying 20,000 tonnes of 380-cst fuel oil from PetroChina for delivery between Sept. 18 and 22 at a discount of 25 cents a tonne to Singapore quotes, sources said.

The front month East-West (EW) spread, the price difference between FOB Singapore 180-cst high-sulphur fuel oil and FOB Rotterdam barge fuel oil with maximum 3.5 percent sulphur, was unchanged from Monday at $18.25 a tonne to Singapore quotes on Tuesday.

In the first half of August, the front month EW spreads averaged $15.58 a tonne before rising sharply last week, trading between $19.25 and $18.25 a tonne over the past five sessions, on the back of weaker Rotterdam prices and stronger Singapore prices, traders said.

TENDERS:

– State-owned Indian Oil Corporation (IOC) is offering 35,000 tonnes of 380-cst high-sulphur fuel oil for loading between Sept. 17 and 19 from the port of Chennai, industry sources said.

The tender closes on Aug. 24.

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