Daily Times

SINGAPORE: Profits on refining fuel oil have been hammered to multi-month lows over the past two weeks on emerging signs of growing supply and faltering demand, retreating from stubbornly elevated levels at the start of the quarter.

By the end of October, fuel oil refining margins in Singapore were around 30 percent higher than the same time a year ago. They were boosted by expectations that the Organization of the Petroleum Exporting Countries would continue propping up crude oil prices by withholding supplies of fuel oil rich grades, as well as by lower output from key producers like Russia and Venezuela.

But some indications of growing supply and weaker demand conditions have recently dragged on fuel oil refining margins, four trade sources said. They all declined to be identified as they were not authorised to speak with media.

“It’s not too surprising (that margins have fallen),” said one Singapore-based fuel oil trader. “Fundamentals are looking slightly weaker and (refining) margins were probably over-extended.”

Published in Daily Times, December 8^th 2017.