SINGAPORE Dec 5 Western fuel oil shipments to
East Asia in December are expected to increased by 10 percent
from the previous month, with 5.1-5.2 million tonnes
provisionally booked so far, according to a Reuters survey of
traders and shipping brokers.
This is 475,000 tonnes higher than November, and the third
consecutive month when volumes are higher than 4.5 million
tonnes, the survey showed.
The high inflows since October have depressed market
sentiment, with the front seven months of fuel oil's 12-month
forward curve flipping into contango.
The prompt spread hit a record three-year low of minus $5.63
a tonne on Nov. 30, and has hovered around minus $5.00 a tonne
since then, Reuters data showed.
In a contango market, front-month prices are lower than
those in the future, indicating a weaker prompt market.
As with November, this month's arrivals consist mainly of
"bunker ready" grades, which traders think will further weaken
the marine fuels market.
"That's a lot of supply coming when spot demand has been
quite poor," said a bunker source.
The marine fuels market is the main outlet for fuel oil, and
weak demand has seen bunker differentials hovering near parity
for the last two weeks.
JANUARY ARRIVALS TO REMAIN HIGH
Around 4.8 million tonnes of shipments have been fixed so
far to arrive in Asia in January, with the window still open for
PetroChina was seen provisionally booking around 1.2 million
tonnes of fuel oil from the Caribbean to China or Singapore.
Singapore onshore residual fuel oil stocks have been high,
staying above the 20 million barrels mark for six consecutive
weeks, according to data released by state trade agency
International Enterprise (IE).
In the week to Nov. 28, stocks in Singapore rose to a near
five-month high of 22.5 million barrels, the data showed.
(Reporting by Lee Yen Nee; Editing by Miral Fahmy)