SINGAPORE: Premiums for both ex-wharf and delivered 380 CST bunker fuel against the Mean of Platts Singapore 380 CST high sulfur fuel oil assessments soared to multi-month highs Wednesday on tight availability and steady demand.
The premium for ex-wharf 380 CST bunker fuel rose $1.78/mt on day to be assessed at $10.54/mt. It was last assessed higher at $10.72/mt on November 27, 2014, data showed. Ex-wharf 380 CST bunker fuel was assessed $6/mt higher on day at $171.5/mt Wednesday. It outpaced the $4.22/mt day-on-day rise in MOPS 380 CST HSFO, which was assessed at $160.96/mt Wednesday. The premium for delivered 380 CST bunker fuel surged $7.78/mt from Tuesday to $19.04/mt — a 10-month high. It was last assessed higher at $19.56/mt on February 10, data showed. Delivered 380 CST bunker fuel was assessed up $12/mt on day at $180/mt.
The spread between delivered and ex-wharf 380 CST bunker fuel rose $6/mt from Tuesday to $8.5/mt, a nine-month high. It was last higher at $9/mt on March 17, data showed. While trade sources said this week there was tight availability for bunker fuel deliverable on a prompt basis, some traders said this was likely due to reluctance among some sellers to offer at lower premiums, especially for end-December delivery. “If a seller really wants to sell, then there’s plenty of oil, but if he wants to keep it for next year, then there is tightness. If a trader has already achieved his target volume for this year, then he may keep the volumes for next year.
Even othwerwise, it’s unlikely that he will achieve his target in the last couple of days of the year,” said a trader. Singapore’s monthly bunker sales over January-November averaged 3.74 million mt, a 5.8% increase as compared to January-November 2014. “I don’t think there is really any shortage of oil … there’s no issue with either quality or availability. I think the premiums have shot up because of the long holiday weekend ahead,” said another trader.
Though Western arbitrage fuel oil for December arrival was seen to be relatively lower at around 4 million mt, fuel oil inventory in Singapore remained at healthy levels, traders said. Singapore’s on-shore inventory of heavy distillates for the week ended December 22 stood at 27.06 million barrels as compared with 27.24 million barrels a week earlier, data released Wednesday by IE Singapore showed.
“If a buyer needs to meet his requirement over the holiday period, he would rather pay these high premiums or he might end up having to pay a much higher premium if he sends out inquiries over the holiday period,” said the second trader. Spot premiums for ex-wharf 380 CST bunker fuel have gone up from $3-$4/mt in mid-December to $10.54/mt Wednesday, data showed.
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