Asia: Fuel Oil Demand Down; Amidst Crude Gains

Maritime Activity Reports, Inc.

May 27, 2014

Demand for marine fuel in Singapore, the world's largest bunkering hub, is beginning to take a hit as high flat prices kept buyers on the sidelines, traders said.


The 380-cst bunker fuel price stood at $604.25 a tonne, and while it dipped 75 cents a tonne from Monday, it was still 0.6 percent higher than last week's average of $600.55 a tonne,
Reuters data showed. "This week's demand is not as good as previous weeks. Flat price wise, anything below $600 a tonne should be able to attract buyers back," said a Singapore-based trader. Bunker prices have hovered above the $600-a-tonne mark since last Wednesday, after being mired below the level for more than a month since mid-March.

The weakening end-user demand has also squeezed the intermonth spread, which refers to the price spreads between June and July swaps, of benchmark 380-cst, traders said. The 380-cst intermonth spread stood at $2.50 a tonne to Singapore spot quotes, down 50 cents from Monday, Reuters data showed.

This was a way to minimize costs, particularly if sales continue to weaken further, as it meant that current inventories to be rolled into the next month will likely increase, traders said. The intermonth spread is an indicator of storage costs, they added.

Reporting by Jane Xie; Editing by Sunil Nair

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