*Asian Fuel Oil Market News
It is expected that the strong sentiment in the physical is to continue for VLSFO with lower arbitrage cargoes coming into Singapore. Imports for August are estimated to be 1.5 – 2 million tonnes, down from 2 – 2.5 million tonnes in July. This is also being driven by lower Asian refiner production cuts due to bad margins forcing producers to be in no hurry to resume to pre-virus levels. So the double whammy of low arb cargoes and lower refiner production looks like it will start to drain away stocks of 0.5% fuel.
The HSFO demand remain strong, still being driven by strong Middle Eastern demand. Singapore’s fuel oil exports to Saudi Arabia in July totalled 135,014.05 mt, according to Enterprise Singapore data. In Europe the market is also strong based off scrubbered ship demand.
*China Loses its Taste for Crude
After record levels of crude imports last month, China seems to have finally started losing interest in imports. The number of supertankers bringing crude to the country in the next 3 months has fallen by 12 to 111, according to Blomberg data. This brings it closer to the 2016-2019 average of around 80-90. Numbers were down during the height of the pandemic in February to April, which was followed by a large increase to over 120 over midsummer. It is now expected to level off around average levels as the immediate demand for crude through restarting its economy no longer exists.
*OPEC Output up 970k bpd
OPEC and its allies agreed to cut supply by a record 9.7 million bpd from May 1 to offset an oil price and demand slump triggered by the coronavirus crisis. OPEC’s share of the cut is 6.084 million bpd. Compared with the levels from which they agreed to cut – their output in October 2018, in most cases – the 10 OPEC members bound by the deal have reduced production by 5.743 million bpd. Given the pledged reductions total 6.084 million bpd, that equates to 94% compliance. June output was revised down by 270,000 bpd, as Iraqi, Libyan and Venezuelan production was lower than first thought according to Reuters data.