RESIDUAL FUEL OIL PRICES CRUMBLE UNDER PRESSURE OF EXCESS SUPPLY

RESIDUAL FUEL OIL PRICES CRUMBLE UNDER PRESSURE OF EXCESS SUPPLY

Residual fuel oil prices were hit harder than other refined products in Singapore because of a strong supply-demand imbalance, Singapore traders said.

July futures for high-sulfur residual fuel oil on the Singapore International Monetary Exchange closed at $57 a metric ton (about $8.70 a barrel) on Wednesday. Prices dipped as low as $51.50 during the day.The product is widely used as bunker fuel.

Cash market high-sulfur residual fuel prices in Singapore have dropped by $15 a metric ton to just under $60 since the beginning of the week, traders said.

Companies holding high stocks saw the value of their inventory drop by 20 percent in two days, one trader said.

Storage tanks in Singapore are full. One seller said major bunker fuel suppliers had to turn down attractively priced import cargoes because they had no room to store the oil.

Refiners, who have been maximizing their use of cheap high-sulfur crude

from the Persian Gulf, also are awash in high-sulfur fuel oil and are not buying import cargoes, traders said.

The lack of buying interest and continued steady flow of imports will keep prices under pressure. The historical low for fuel oil in Singapore is less than $40 a ton (about $6 a barrel).

A diversion of import cargoes to other markets is unlikely, with prices in Europe under even more pressure, traders said.

In the Mediterranean, where fuel oil has been exceptionally weak, prices dropped by $10, to just under $50 a metric ton, traders in Singapore said.