Onshore fuel oil storage volumes in Singapore spiked in the latest week, as high supplies within the region of Asia spurred a build that was more than expected, official data showed on Thursday.

Residue inventories in the week of Dec. 12-18 were at 28.97 million barrels (4.56 million tons), hitting the highest weekly volume seen in more than eight and a half years, data from Enterprise Singapore showed.

Stronger volumes of supplies have flooded Asia in recent months, while bunker fuel demand slowed towards the year-end holiday season, according to trade sources.

The high inventories and steady gush of supplies to Asia have dampened market benchmarks in recent weeks, with spot differentials for fuel oil staying in thin premiums, while the market’s backwardation remained narrow.

“The end of peak ocean freight season and high volume arrivals have led to a build-up in inventories, dampening the residual market structure,” said Emril Jamil, senior specialist for crude and fuel oil at LSEG Oil Research.

Most of the week’s imports came from Brazil and the United States, the data from Enterprise Singapore showed, excluding cargo movements from Malaysia.

Meanwhile, fuel oil cargoes flowing out of Singapore were mostly headed to China and South Korea in the week ended Dec. 18.

The inventories averaged higher for a third consecutive month due to strong arbitrage supply inflows this quarter. Weekly onshore stockpiles averaged at 21.89 million tons in December so far, up from 18.15 million tons in November.
Source: Reuters (Reporting by Jeslyn Lerh)