The Singapore fuel oil market is not expected to recover from an oversupply situation despite lower arrivals from the US and Europe seen for April, market sources said Thursday.
Fuel oil traders expect about 4 million mt to arrive in Singapore from the West, down from 4.5 million mt in March.
“I don’t think supply will tighten. There is still a lot of oil,” said a fuel oil trader in Singapore.
“Singapore will receive about 2.7 million mt of fuel oil cargoes over March 20-31. Tankers are already waiting to discharge around Singapore because there is no space to put the replenishments in,” said another trader.
The Singapore fuel oil market has been receiving heavy inflows in the second half of March, especially from the Black Sea where tankers carrying fuel oil were stuck due to bad weather conditions in February, traders said.
DEMAND YET TO PICK UP
While the Middle East markets were expected to start buying fuel oil cargoes in April, “demand from the Middle East has not picked up yet,” said a trader.
In Singapore, meanwhile, bunker demand has been lackluster since the Lunar New Year holidays in February and has yet to recover in March, market sources said.
Industry sources attributed this weak demand to the US-China Trade war and lower movement of bulk carriers from Brazil to China after an accident in Brazil in February.
OPEC’s production cut also reduced bunker demand because there were fewer tankers moving oil in and around Asia, a bunker trader said.
Singapore’s bunker fuel sales in February fell 8.6% year on year to 3.78 million mt, according to latest data from the Maritime and Port Authority of Singapore.
Compared with January, bunker fuel sales in February were down 10%, the data showed.
Reflecting the weak fuel oil market in Singapore, the 380 CST April/May time spread averaged at $1.55/mt over Monday to Wednesday, down from an average of $2.40/mt seen for the whole of last week, S&P Global Platts data showed.
Source:Platts
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