ENGINE: East of Suez Bunker Fuel Availability Outlook
• VLSFO supply crunch easing some in Singapore
• Fuel oil stocks add weight in Singapore and Fujairah
• Bad weather halts Zhoushan bunkering
VLSFO supply has improved some in Singapore after coming under pressure from slowing cargo inflows through December. Suppliers needed more than two weeks of lead time for VLSFO stems when demand peaked leading up to the holiday period.
Recommended lead times for VLSFO have since shortened to 8-9 days, which is still longer than the 4-5 days required for LSMGO.
Singapore’s residual fuel oil stocks dropped to three-month lows of less than 20 million bbls in the last week of December, before bouncing back up when imports doubled in the first week of January, Enterprise Singapore data shows. Fuel oil cargoes mostly arrived from Saudi Arabia and the UAE, but also from European countries like Lithuania, Italy and Denmark, according to cargo tracking.
Several large fuel oil cargoes are now bound for Singapore from the ARA and set to arrive later in January. But VLSFO cargo supply is expected to remain tight going into February as partly illustrated by higher cargo premiums over ex-wharf, sources say.
VLSFO and LSMGO grades can be sourced at a shorter notice of three days in Zhoushan. The port’s HSFO380 tightness has also eased, with lead times coming down to five days now.
Rough weather suspended anchorage bunkering in Zhoushan at the beginning of the week. Bunkering has been delayed but is expected to resume with calmer conditions on Wednesday.
Prompt supply of all grades continues to be tight in Fujairah. HSFO380 got particularly tight last week and pushed Fujairah’s price to wider premiums over Singapore. The HSFO380 supply squeeze has eased some this week, with recommended lead times coming down from 13 days last week, to nine days now.
Fujairah’s heavy distillate and residual fuel oil inventories averaged 15% lower in 2021 than in 2020, according to Fujairah Oil Industry Zone and S&P Global Platts data. These stockpiles, which include fuel oil for bunkering and power generation, added about 6% of volume in the week to 3 January and rose above the 2021 average.
Suggested lead times for VLSFO and LSMGO in Fujairah remain at around 8-9 days ahead.
The availability outlook is similar for Japan’s Tokyo Bay, where lead times for VLSFO, LSMGO and HSFO380 are all around nine days out.
VLSFO is also tight in South Korea’s southern ports of Busan, Ulsan and Yeosu with recommended lead times of 9-13 days. HSFO380 and LSMGO grades are also “very tight”, sources say.
Bouts of rough weather could intermittently disrupt bunkering in these ports in the second half of the week.
Source: ENGINE (https://engine.online/)