From Fujairah to Rotterdam, marine fuel under pressure

From Fujairah to Rotterdam, marine fuel under pressure

SINGAPORE: Global supply of fuel oil, used by ships and power plants, is expected to grow in the third quarter, depressing the marine fuel market as shipping demand remains weak, analysts and trade sources said.

Third-quarter supply is estimated to rise by 620,000 barrels per day (bpd) from the second quarter as China and Brazil increase production, according to consultancy Energy Aspects.

This comes as inventories across key marine refueling hubs recently reached all-time highs, depressing bunker fuel prices and refiners' margins and dashing hopes for a profitable year for sellers of low sulfur fuel that meets new emission regulations set by the International Maritime Organization.

"We had 9-10 million tons (of fuel oil inventories) at the start of the year that was supposed to draw by the start of Q2 but we are seeing 13 million tons now and (it is) building every month,“ said a senior fuel oil trader who declined to be identified.

Inventories in northwest Europe and the UAE were at record highs in June while those in top bunkering port Singapore climbed to their highest level in more than three years.

Record supplies have depressed the delivered VLSFO (very low sulfur fuel oil) bunker spot discount to around record lows of