Fuel Oil

Market Overview

Sing 0.5 spreads supported

Fuel Oil

Sing 0.5% spreads have moved sideways for two weeks after strong early-month gains.

0.5% E/W keeps climbing on dirty freight strength, with Nov 26 gap at $140/t (roughly double from early September) and a Rotterdam-Singapore Suezmax fixture costs almost 20M USD. Forward arbs looks shut, which means freight needs to fall further and/or E/W must widen to open eastward flows.

The Singapore VLSFO blend margin has recovered but high forward blend costs seen in late September add tightness to an already short region. The open VLSFO arb to Zhoushan compounds this.

We are relatively bullish on Nov/Dec Sing 0.5 spreads but will need to closely monitor freight movements.