Onshore fuel oil stockpiles at key storage hub Singapore plummeted to a 5-1/2 year low, latest data showed, as incoming supplies to Asia fell with the Middle East exporting fewer cargoes due to peak summer demand.

Singapore’s fuel oil inventories STKRS-SIN fell 17.46% from last week to 15.78 million barrels (2.48 million metric tons) in the week ended May 22, the lowest since late-October 2018, Enterprise Singapore data showed on Thursday.

“Singapore inventories plummeted to their lowest since November 2018 as inflows from the Middle East dried up,” said consultancy FGE.

“This was likely due to the seasonally increasing demand for fuel oil for power generation in the Middle East as temperatures rise,” added FGE.

Supplies to the wider Asia region trended lower for a second consecutive month, dipping below 6 million tons for May, ship-tracking data from LSEG Oil Research showed, led by supplies from the Middle East falling below 1.3 million tons for the second consecutive month in May.

This has weighed on weekly inventory levels at Singapore, calculations based on Enterprise data showed, despite countering a weekly uptick in net imports.

Fuel oil inventories averaged at 18.37 million barrels a week in May so far, compared to 20.80 million barrels in April and 20.97 million barrels in March.

The lower supplies have supported high-sulphur fuel oil (HSFO) price benchmarks, with 380-cst fuel margins FO380DUBCKMc1 touching nine-month highs earlier this week.

“HSFO’s strength is attributed to dwindling supplies… with little incremental upside, resulting from Saudi Arabia’s baseload crude output cuts of heavy crudes to Asian refiners that have reduced the production of refinery bottoms,” said analysts at LSEG Oil Research.

On exports, fuel oil outflows emerged from Singapore onshore tanks to South Asian countries including Bangladesh, India and Sri Lanka this week, versus zero last week, based on Enterprise Singapore.

South Asia typically imports more fuel oil during summer months for power generation so this could also lead to further drawdowns in inventories at regional storage hubs, said industry sources.

Source: Reuters reported by Jeslyn Lerh and Cassandra Yap and edited by Krishna Chandra Eluri and Varun H K