Singapore set for multi-year high diesel imports in Feb while exports falter, sources say

Singapore is set to import multi-year high diesel volumes for February, according to data from two shiptrackers and trade sources, as sellers shipped cargoes to Asia's key oil storage hub amid tepid demand elsewhere.

February diesel arrivals into the city-state are slated to top 6.7 million barrels, data from Kpler, LSEG and trade sources showed. This level is a two-year high, LSEG data showed.

Meanwhile, diesel outflows from Singapore were headed for a one-year low of around 3.9 million barrels, Kpler data showed.

March spot market differentials, including deals on the trading window and refiner sale tenders, both fell into discounted territory last week as a result. [MDIS/TENDA]

Ample supplies in Asia are likely to pressure free on board (FOB) Singapore prices and widen the east-west arbitrage price spread, enabling some sellers to start pivoting their cargoes west in the near-term, multiple trade sources said.

The east-west arbitrage price spread - usually represented by the exchange of futures for swaps (EFS) - has been at wider discounts since the end of January, LSEG data showed, with more India-origin barrels heading to Europe in the second half of February.

"Arrivals into Singapore for February are indeed on the high side," said LSEG Oil Research senior analyst Charles Ong, which he attributed to higher volumes from South Korea and Taiwan.

South Korea-loading cargoes "have limited places to go to", he said, given that demand from key buyer Australia may have been covered partly by Indian-origin cargoes discharging there this month at a three-month high.

Slow demand from regional destinations such as Vietnam and the Philippines also forced sellers to ship cargoes to Singapore instead, two trade sources said, despite the current backwardated market structure where it is more profitable to sell front-month loading shipments.

February diesel imports to Vietnam and the Philippines were at three-month lows, LSEG and Kpler data showed.

Vietnam's fuel distributors and refiners faced high stockpiles this month on slow offtake over Lunar New Year, two importers there said, with private refiner Nghi Son Refining and Petrochemical selling spot diesel for the first time since end-2023.

Key charterers of supplies to Singapore were Shell, Aramco Trading Singapore, Trafigura and Vitol, data from LSEG and a shipbroking source showed, with two trade sources adding the increased buying from Shell could be due to lower local offtake as it is in the process of handing over its Singapore refinery to a joint venture led by Chandra Asri.

Shell declined to comment.