Singapore fuel oil inventories extend gains as bunker demand slows

By Jeslyn Lerh

SINGAPORE, March 12 (Reuters) - Onshore fuel oil inventories in Singapore tanks climbed for a third straight week, data from Enterprise Singapore showed, as spot demand for bunker fuel softened in recent days after prices spiked, trade sources said.

For now, the stockbuild shows that prompt supplies are still available at a time when the market is grappling with fears that arrivals will tighten sharply as the U.S.-Iran conflict curtailed shipments from the Strait of Hormuz.

Trade sources expect lower inventories from late March or early April onwards as supplies from key Middle Eastern exporters decline, with shipments stuck in the Gulf.

Singapore's residual fuel stockpiles climbed 3.7% to 24.16 million barrels (about 3.80 million metric tons) in the week to March 11, according to Enterprise Singapore on Thursday. O/SING1

Fuel oil imports are already showing signs of a slowdown, with volumes sliding 62.5% week-on-week to about 489,000 tons. Most of these were indirect imports from the neighbouring storage hub of Malaysia.

Meanwhile, exports from Singapore onshore tanks also fell, sliding 49.4% to about 254,000 tons. China remained the top destination for the outflows, similar to the previous week.

Market sources said demand for bunkers at Singapore slowed in recent sessions after prices and premiums spiked to record highs, with shippers struggling to buy fuel due to extravagant prices.

Some shippers were also trying to hold off from making spot purchases unless they have urgent requirements.

Prices of fuel oil, which mostly goes into bunkering ships, have surged on expectations of tighter arrivals in the coming weeks.

Spot differentials for both high-sulphur fuel oil and low-sulphur fuel oil have risen significantly and remained elevated this week. FUEL/A

(Data from Enterprise Singapore)