Singapore’s Weekly Net Imports Decline As Fuel Oil Stockpiles Fall
During a steep drop in weekly net imports, residual fuel oil stocks at Singapore’s important trading hub decreased for the third week. Onshore fuel oil inventories fell 3% to 19.59 million barrels (3.09 million tonnes), a 12-week low, according to Enterprise Singapore data for the week ending January 25. The same week’s net weekly imports fell by 39% to 376,000 tonnes as more goods were shipped out of Asia on a regional basis.
With 189,000 tonnes, Malaysia had the largest net imports of fuel oil into Singapore, followed by Pakistan with 55,000 tonnes and Brazil with 101,000 tonnes. Japan, the Philippines, and Thailand accounted for most of Singapore’s net fuel oil exports, each at 50,000 tonnes, 46,000 tonnes, and 40,000 tonnes, respectively.
Singapore spot fuel oil premiums have found support recently, reflecting lower stockpiles and sustained bunkering demand. In the preceding week, premiums for fuel oil with a 0.5% very low sulfur content reached five-month highs, and premiums for fuel oil with a 380-CST high sulfur content have also maintained a little upswing.
More About The Fuel Oil Market
The marginal oil market participants, particularly Russia, Iran, Iraq, and Venezuela, will face severe financial challenges, to put it mildly, if the prices continue to decline. They are all money-hungry, and their economies will suffer greatly if oil prices fall to $20 per barrel. Saudi Arabia, the dominant participant in the market, can weather this price decline thanks to its 700 billion US dollar reserve.
The oil fields of their competitors will permanently close down due to ongoing price declines. Why should Saudi Arabia lower its output? They are a low-cost producer, so why should they support the survival of the high-cost producers? Let them vanish amid rivalry.
The new fracking process used in the US to extract oil has an infinite potential to create oil at comparatively low costs. Currently, they are flooding the market with their 10 million barrels per day production. However, there are too many of them. There are currently 1.3 million barrels per day of excess supply on the world market.
Due to the current oil storage overflow, countries need to sell it at extremely low prices immediately. At the moment, this extra oil is put onto ships without a clear destination and sold on the high seas for the lowest price the market will bear.
