Subscribe
Singapore Fuel Stocks at Eight-month Low Ahead of IMO 2020 Deadline
Oil product inventories in the Singapore storage and
trading hub fell to an eight-month low in the week ended July 17,
official data showed, in one of the latest signs that suppliers
are gearing up for rule changes to make marine fuel
cleaner.
Singapore onshore stocks of petroleum products, which include
gasoline, diesel, jet fuel and residual fuel oil, came in at
38.372 million barrels, down from 41.725 million barrels in the
previous week and their lowest since the week ended Nov. 14 last
year, data from Enterprise Singapore showed on Thursday.
"Several industry players are switching their tanks towards the
different kinds of low-sulphur fuels rather than just
high-sulphur fuel oil," a source with a Singapore-based storage
operator said when asked about shrinking oil product stocks.
The switching process will take time and involves clearing
storage tanks occupied by high-sulphur fuel oils (HSFO) and their
blending components, said the source, who declined to be
identified because of company policy.
Under International Maritime Organization (IMO) rules that come
into effect from 2020, ships will have to use fuel with a sulphur
content of 0.5% or less, down from 3.5%, in one of the biggest
fuel-spec changes to hit the global shipping and oil refining
industries in decades.
The decline in inventories was led by distillates
<STKLD-SIN>, sinking to a more than nine-month low of
10,163 million barrels, an residual fuels <STKRS-SIN> that
slipped to a six-month low of 18.539 million barrels, the data
showed.
Fuel oil inventories have registered five straight weeks of
declines and are 6% below their year-ago levels, the data showed,
raising concerns that tightening supplies could struggle to meet
current demand.,
Declining HSFO inventories, together with the expected sharp
decline in demand for HSFO after the IMO rules kick in, have
helped to push the fuel oil market structure into steep
backwardation in recent weeks, making HSFO storage increasingly
unprofitable. A backwardated market typically has tight
inventories, with the price for immediate delivery trading above
future prices.
Storing of oil products is uneconomic in a backwardated market
because it is difficult for traders to recover storage costs.
Singapore's onshore light distillates, which comprise mostly
gasoline, had the most significant drawdown, resulting in
inventories hitting slose to a 9-1/2 month low, the data showed.
There was no record of Indian gasoline exports to Singapore,
while Taiwan's volumes of 22,257 tonnes were 80% down from the
week ended July 10.
Reporting by Roslan Khasawneh
Jul 18, 2019
