European fuel oil exports fell slightly in June

Fuel oil cargo movements from European ports to Asia-Pacific fell marginally in June, when only two tankers departed northwest Europe for Singapore.

European exports to Singapore were 400,000t in June, down from 422,000t in May. Fuel oil inventories in Singapore reached 3.5mn t at the end of June, compared with 3.4mn t in May. These higher stocks weakened European export economics — the Singapore second-month 380cst swap averaged a $16/t premium to European high-sulphur fuel oil (HSFO) cargo prices in June, compared with $26/t in May.

Singapore is the world's largest bunkering hub, with monthly marine fuels sales of around 4mn t.

European shipments could pick in July, as Singaporean fuel oil inventories fell to their lowest in three months at 3mn t in the week to 4 July. Prompt prices in Singapore gained in response to this tighter supply recently, with competition from buyers in the Mideast Gulf where fuel oil is used for power generation.

European exports could be aided by demand for 0.5pc sulphur fuel oil in Singapore ahead of the International Maritime Organisation (IMO) 2020 rules. Trading firm Vitol fixed a very large crude carrier (VLCC) to take 270,000t of fuel oil eastbound from Rotterdam in July. This could contain 3.5pc and 0.5pc fuel oil. Vitol fixed another VLCC on the same route for the same amount of fuel oil for the beginning of August.

Improving storage economics in Singapore for 0.5pc fuel oil could drive higher exports from Europe towards 2020. Storage operators in Singapore started cleaning their tanks to replace HSFO with 0.5pc fuel oil and blending components.