Singapore Q2 ex-wharf 380 CST bunker fuel term inked at $0.5-$1/mt pre
Singapore ex-wharf 380 CST bunker fuel term contracts for the second quarter of 2016 have been concluded at premiums of $0.5-$1/mt to Mean of Platts Singapore 380 CST high sulfur fuel oil assessments, trade sources said this week.
This compares with current quarter term contracts concluded at premiums of $1-$1.50/mt to MOPS 380 CST HSFO assessments.
Tight availability in December and in the first first half of January had pushed up the term premium for the current quarter.
A subsequent pick up in Western arbitrage fuel oil flows into Singapore has, however, led premiums for the next quarter to inch lower, traders said.
Term contracts for April supply of the same grade of bunker fuel have been concluded at premiums of $1-$2/mt to MOPS 380 CST HSFO assessments, traders said.
This compares to March contracts concluded at a slight discount to up to a $1/mt premium to MOPS 380 CST HSFO assessments.
A jump in cash differentials for 380 CST high sulfur fuel oil, led by a surge in buying interest, has lifted the spot premium for ex-wharf 380 CST bunker fuel for the better part of March which, in turn, has resulted in relatively higher term premiums for the bunker grade fuel for next month, added traders.
A buying frenzy saw the 380 CST HSFO cash differential rise from a 4-month low — of minus $5.33/mt — end February to a 9-month high of $3.33/mt early last week, Platts data showed.
It has since dipped lower and was assessed at a discount of 45 cents/mt Tuesday.
Meanwhile, the spot premium for ex-wharf 380 CST bunker rose from a near 9-month low — of minus $3.89/mt — early March to a 1-month high of $1.44/mt late last week, data showed. It was assessed at a premium of 83 cents/mt Tuesday.
Premiums or discounts for physical bunker fuel reflect prices buyers are willing to pay relative to published benchmark values.
Cash differentials for physical fuel oil represent the price buyers are willing to pay for the oil over and above benchmark values published around the day a cargo loads.
Falling physical premiums indicate lower demand and are typically accompanied by a weakening in the structure of the forward curve.