[SINGAPORE] Supplies of western-origin fuel oil into Asia in January could hit its highest in nine months, as multi-year low crude prices fuel higher production of oil products in Europe and the Americas, sources said on Tuesday.
Approximately 4.35 million tonnes of the heavy oil product is expected to arrive in Asia in January, 10 per cent more than this month, Reuters analysis of shipping data showed.
This could mean a further softening in fuel premiums as an abundance of supply exceeds steady demand.
The 380-centistoke cargo premiums have declined by 70 per cent from its peak of US$8.93 a tonne on Dec 3 to US$2.75 a tonne above Singapore spot quotes on Monday, Reuters data showed.
Marine fuel sales in Singapore, the world's top bunkering hub, fell one per cent month-on-month to 3.55 million tonnes in November, while China's intake of fuel oil slipped 1.5 per cent to 1.15 million tonnes in October, official data showed.
Of the 24 vessels fixed and tentatively booked, all have Singapore fixed as their destination. Two of them - Maersk Pearl and Signal Cheetah - carrying a total of 160,000 tonnes of oil, also have the option to move to other eastern ports, including those in China, Japan, and South Korea.
"January looks very heavy on arrivals. Refinery margins are good," said a Singapore-based trader.
"So more flows from Europe and west of Russia."
When European refiners raised their crude intake by 1.6 per cent in October, fuel oil production rose 10.6 per cent, the steepest climb among other oil products, according to industry monitor Euroilstock.