Residual fuel oil stocks at key trading hub Singapore climbed to its highest in over a year, official data showed Thursday, as storage demand remained firm.

Onshore fuel oil stocks rose 5% to 23.74 million barrels (3.74 million tonnes) in the week to April 5, last higher in February 2022, based on Enterprise Singapore data.

The inventory build emerged despite a fall in weekly net fuel oil imports, which dropped 22% to 439,000 tonnes.

Storage demand for fuel oil has maintained a robust pace at key hubs like Singapore and Fujairah this year, with tankage rental fees holding steady to higher, trade sources said.

Current front-month backwardation levels for the flagship 0.5% low sulphur fuel oil grade have also crunched by more than 50% in the past two months.

The product’s time-spread was at $7.50 a tonne on Thursday, compared with $17 in early February when the VLSFO market started weakening. A smaller backwardation or a contango structure makes it more viable for traders to store oil for sale at a later date.

Tepid demand for marine refeulling could also have contributed to the stocks build, as buying inquiries retreated at the start of the week, after crude prices surged amid surprise output cuts from OPEC+.

In the week to April 5, top net fuel oil imports in Singapore were from Brazil at about 195,000 tonnes, followed by Malaysia at 102,000 tonnes and Kuwait at 80,000 tonnes.

Meanwhile, South Korea was the top destination for Singapore’s net fuel oil exports with volumes at 50,000 tonnes, followed by Bangladesh at 42,000 tonnes and China at 19,000 tonnes.

The total supply of fuel oil hitting Asia is expected at about 4.5 to 5.0 million tonnes in April, steady from Q1’s average monthly volumes, based on Refinitiv ship-tracking data.

Source: Reuters reported by Jeslyn Lerh and edited by Sohini Goswami