Bunker Price Slump Set to Deepen

By Jane Xie

SINGAPORE (Reuters) – Marine gas costs are set to fall additional after plunging to their lowest since late 2013, with merchants in Singapore, the world’s largest ship refueling hub, saying they wish to promote shortly within the face of a worldwide provide glut.

[contextly_sidebar id=”xbEUvi4XDL7pmJrom1GnxugvTWfTAcHg”]End customers of marine fuels, also referred to as bunkers, usually pay a premium over the price of bigger cargoes to account for logistics prices, however that flipped to a reduction from early June.

“The market is flooded with oil and everyone is desperate to sell quickly, so you have a price war,” stated a Singapore-based dealer.

The 380-cst marine gas grade traded at a reduction of $1.95 a tonne under the costs of enormous cargoes on Monday, after hitting a reduction as extensive as $5.38 a tonne late final week.

The rout in marine gas costs has been stoked by inventories at refineries and industrial oil tanks leased by merchants in Singapore which might be at their highest since 1999.

Stocks stand at over 27 million barrels, in comparison with round 22 or 23 million barrels seen in September 2013, the final time costs had been at present ranges.

Robust oil processing margins have spurred western refiners to ramp up output, pushing extra oil to Asia, which is structurally in need of gas oil.

Would-be sellers are additionally apprehensive that the document volumes of intra-Singapore gas oil trades because of load from the second-half of June will worsen port congestion.

A document quantity of over 4 million tonnes of each the 180-centistoke and 380-cst grades have traded for the reason that begin of June in a worth evaluation course of referred to as the Market On Close facilitated by Platts, a McGraw Hill Financial unit.

“The cargo berths are going to be congested but people will still want to move the oil out,” stated one other Singapore-based dealer. “Selling ex-wharf is one way (of doing that).”

Ex-wharf oil refers to gas loaded straight from oil terminals in parcels of two,000 to five,000 tonnes.

But the long run worth outlook is brighter, with merchants saying underlying demand stays stable and with decrease provides into Asia anticipated in July.

Swap costs level to a potential restoration in September.

(Additional reporting by Henning Gloystein; Editing by Joseph Radford)