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 more bookings.
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)