The volume of fuel oil stored in onshore tanks at key trading hub Singapore fell to its lowest in 16 weeks, data showed.

Fuel oil stockpiles were at 16.86 million barrels (around 2.65 million metric tons) in the week to Sept. 11, sliding 10.1% from the previous week, Enterprise Singapore data showed.

The drop came amid strong backwardation in the market, in which the spot price of the product is higher than the future price.

The balance-September/October timespread for 0.5% low sulphur fuel oil held above $20 per ton this week, based on market sources, while the same timespread for 380-cst high sulphur fuel oil widened beyond $14 per ton.

A steeply backwardated market makes storage economics less attractive as sellers can release more oil at a higher price in the spot market.

Fuel oil inventories averaged at 17.81 million barrels a week in September so far, sliding from an average of 18.81 million barrels in August, the Enterprise data showed.

However, total imports saw an uptick in the week, climbing more than 75% to above 755,000 tons, while exports dropped more than 35% to about 147,000 tons.

Indonesia was the top origin for imports, while most of the week’s exports were bound for the Philippines.
Source: Reuters (Reporting by Jeslyn Lerh; editing by David Evans)