Tight VLSFO availability shrinks price difference to LSMGO in Singapore

The premium of LSMGO over VLSFO at the port has shrunk to its lowest level since January 2022 due to tight VLSFO availability.

VLSFO cargoes have been in short supply in Singapore, two sources said. Ex-wharf supply has also tightened as most barge loadings are scheduled for next month.

Tight barge availability has contributed to tighten VLSFO supply in the port, a source said. Lead times of up to 10-13 days are now recommended by several suppliers. Some suppliers can deliver stems with shorter lead times, but these stems are usually priced higher.

The margin of delivered VLSFO over FOB VLSFO cargo has averaged $23/mt this month, up from $18/mt in July and $16/mt in June.

LSMGO supply is better in the port and LSMGO prices have not seen the same upward pressure as VLSFO prices have. As a result, Singapore's LSMGO premium over VLSFO has averaged $84/mt this month, down from $118/mt in July and $125/mt in June. The spread is at its narrowest since January 2022 and has made a significant drop from $262/mt a year ago, according to ENGINE data.

Singapore’s fuel oil stocks have fallen to nearly 19 million bbls - the lowest since May - amid a substantial 36% decline in net fuel oil imports this month, with imports down by 585,000 bbls.

Fuel oil imports from the UAE have dropped significantly, from a peak of 161,000 b/d in May to just 57,000 b/d so far this month, according to cargo tracker Vortexa.

Russia has been the largest exporter of fuel oil to Singapore since June, and been the source of nearly 16% of the port's imports this month.

By Nithin Chandran and Tuhin Roy

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