Buyers trying to load record fuel oil volumes traded last month in Singapore are congesting the port's oil terminals, while land tanks are nearly full and tens of millions of barrels of marine fuel are being held in ships, traders and shipbrokers said.

Almost 6 million tonnes, or 39 million barrels, of fuel oil were traded in June in the world's largest market for shipping fuel during an end-of-day pricing process, pushing up rates for Aframax vessels to near seven-year highs as buyers tried to find tankers to load the cargoes. [TNKR/AS]

Complaints of loading delays resulted in at least two companies being temporarily barred from oil pricing agency Platts' daily market-on-close (MOC) price assessment process, traders said.

Platts - which declined to comment - periodically bans companies from its pricing process for trading behavior, financial concerns or non-fulfillment of contracts.

"There are loads of delays in Singapore and many vessels are loaded with fuel oil, and I believe some of them have not found a home," a Singapore-based shipbroker said.

At least 28 tankers have been hired for short-term charter by various traders, including Glencore's shipping arm ST Shipping and Petrochina's trading arm Chinaoil, possibly to store the excess oil, shipbrokers said.

One broker estimated that another 10-18 tankers are loaded with fuel oil unable to find buyers. Some 8-12 cheaper clean tankers have also been chartered to load fuel oil instead, and with so many cargoes changing hands, the congestion and shipping tightness are expected to ease only later in July, traders said.

"Oil bought ... in June is yet to be fully disposed and now the buyers' vessels are looking to run late for loading," a Singapore-based fuel oil trader said.

The unprecedented trading in June was sparked in part by the Middle Eastern summer, which means more local demand for fuel oil to generate electricity for air conditioners, fewer exports of the product and higher prices in Asia.

Strong refining margins also spurred U.S. and European refiners to ramp up output, pushing excess fuel oil to Asia and triggering a stock-build.

Singapore's fuel oil stocks surged to a record of over 27 million barrels in June, before easing to nearly 25 million barrels in the week to July 1, data from International Enterprise showed. [O/SING1]

Fuel oil buyers in June were mainly commodity merchants Glencore and Mercuria as well as PetroChina, while the main sellers included Russia's Lukoil, Total and merchant Vitol [VITOLV.UL], according to a report by Platts, a unit of McGraw Hill Financial.

Source: www.reuters.com

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