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VLSFO PREMIUM INCREASES BUT FUEL PRICES STILL UNSTABLE

Thursday, May 7, 2020 

Bunker prices in Singapore remain highly volatile, thanks to the current glut of oil on the market, but the differential between 0.5% sulphur fuels and 3.5% HFO has widened in Singapore.

After Ocean Bunkering Services (OBS), a subsidiary of oil trading company Hin Leong, and one of Singapore's three largest bunker suppliers, suddenly withdrew from Singapore in April, prices of 0.5% fuel rose substantially, resulting in a differential of about US$36/t, up from the previous low of about US$7/t. Since then the premium for low sulphur fuel has dropped to about US$28/t as former OBS clients successfully negotiated new deliveries.  

Shipowners needing 0.5% fuel, which means virtually all non-scrubber equipped vessels, have tended to bunker in Hong Kong rather than Singapore, as the fuel has been cheaper there, although industry analysts do not expect this situation to continue for long.

Meanwhile another Singapore-based oil trader, Zenrock, which is involved primarily in the distillates sector, has reportedly been placed under judicial management - a type of debt restructuring - which could further disrupt the LSFO bunker market.

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