Singapore residue stocks fall to 43-month low of 17 mil barrels on lower imports
Singapore’s commercial stockpile of residues fell to a 43-month low of 17.115 million barrels in the week ended July 11, IE Singapore data showed.
IE Singapore describes total stocks of heavy distillates as residues, and include cracked, straight run fuel oil and low sulfur waxy residue.
The stockpile, which was down 2.4% week on week, was last lower on November 26, 2014, when the inventory was at 16.807 million barrels.
Traders said the volume of arbitrage cargoes arriving in Singapore would decline in July because of strong demand from Saudi Arabia, where fuel oil is used as feedstock for power plants.
In addition, the arbitrage trade from the West is not viable because of the narrow price spread between Singapore 380 CST high sulfur fuel oil and Rotterdam barge prices, the traders added.
Imports of fuel oil declined to 808,402 mt in the week ended July 11, down 12.3% from a week ago, the data showed.
The traders expected that Singapore will receive about 3.5 million mt of arbitrage cargoes from Europe and the West, compared with 5 million mt in normal months. Singapore is also expected to receive about 1.5 million mt of cargoes from the Middle East in July, which is similar to normal months.
On the other hand, Singapore exported 311,376 mt of fuel oil in the week ended July 11, down 61.4% week on week, the data showed.
Bunker demand has been steady, industry sources said. Singapore sells about 4 million mt of fuel oil a month in the bunker market. Other than bunker market, Singapore exports about 1.5 million mt/a month of fuel oil to China, and about 1 million mt/a month to Hong Kong, South Korea, Bangladesh and so on.
“The market does not have enough replacement,” a trader based in Singapore said.