Spot bunker demand in Singapore strengthens on week

Demand for spot bunker fuel in Singapore strengthened this week over Opec+ group's indecision about output levels that lowered crude prices overnight.

Several buyers had been holding off purchases, awaiting an anticipated decision by Opec+ last Friday to increase production. But the group of producers did not reach an agreement and talks have been called off without a date for the next session, following discord between Saudi Arabia and the UAE.

Brent crude oil prices as a result fell sharply on Tuesday to $74.53/bl, after trading as high as $77.84/bl earlier in the session - the highest level since October 2018.

"I have been saving some purchases, hoping the market might soften," said a Singapore-based buyer.

"Demand over the past few days has already been firming up, especially for prompt deliveries, as buyers hoping for lower prices could no longer wait much longer," said a local trader. "The price drop now might spur more buying during today's trading session," he added.

"Demand is a bit better lately, with less fighting over a few inquiries by suppliers, although the market is nowhere near tight," said another local trader.

Tighter safety curbs at China's largest bunker port of Zhoushan could also have diverted some demand to Singapore.

Demand for spot supply in Singapore was especially weak in March-May, with delivered premiums falling to record lows. Market participants are hoping the market has now turned the corner.

Argus reported 15 spot deals on 6 July and 13 on 5 July, compared to an average of 10/day in June.

By Sammy Six