SINGAPORE Jan 3 Around 5.6 million tonnes of
Western fuel oil have been provisionally booked to arrive in
East Asia in January, the highest volume in 10 months, according
to a Reuters survey of traders and shipping brokers.
This is 675,000 tonnes higher than December's shipments, and
the fourth consecutive month when volumes will be higher than
4.5 million tonnes, the survey showed.
The continued high inflows means the supply overhang that
has hit the market since October will persist, traders said.
While demand in January and February was projected to be
healthier due to winter requirements in North Asia, appetite has
not been as robust as the same period last year.
"We can't expect too much this winter ... I don't see
premiums shooting up as much as last year," a fuel oil trader
The marine fuels market, which is the main outlet for fuel
oil, has also experienced lacklustre demand for the past few
months, with the shipping industry hurt by an uncertain economic
Reflecting the persistently weak sentiment, fuel oil's
prompt intermonth spread has remained in a contango structure
since October, according to Reuters data.
In a contango market, front-month prices are lower than
those in the future, indicating a weaker prompt market.
FEBRUARY ARRIVALS ALSO HIGH
Around 4.05 million tonnes of shipments have been fixed so
far to arrive in Asia in February, with the window for
additional fixtures still open.
PetroChina was seen provisionally booking around 1.2 million
tonnes of fuel oil from the Caribbean to China or Singapore.
Traders said that the supply glut may well persist as
February is a short month.
(Reporting by Lee Yen Nee; Editing by Himani Sarkar)