Onshore inventories of residual fuel at key trade hub Singapore climbed 2.6% to two-week highs, data showed on Thursday. Onshore fuel oil stocks were at 21.09 million barrels (3.32 million metric tons) in the week to Dec. 27, based on latest data from Enterprise Singapore. Exports flowing out of Singapore totalled about 227,000 tons, down 26% from last week.

The top three export destinations included China, Bangladesh and Hong Kong, same as the previous week. Meanwhile, the top origin countries for Singapore's net fuel oil imports were Brazil, Japan and the United Arab Emirates. Total weekly net import volumes in Singapore slipped 42% to 541,000 tons in the week to Dec. 27, the data showed. Despite lower net import volumes, weekly inventories rose slightly as storage economics possibly improved amid a weaker backwardation in recent weeks.

A backwardated market structure means the current value of product is higher than it will be in later months. A stronger backwardation typically encourages traders to release oil from storage, while a weaker backwardation could allow more storage.

The inter-month spread for 0.5% very low sulphur fuel oil, which is an indicator for market backwardation, has come off sharply from 16-month highs seen in mid-November. The front-month spread hit $30 a ton on Nov. 20 but has since softened to $7 a ton as of Nov. 27, based on LSEG data. Dec 27, Fuel oil Total Total Net (in metric tons) Imports Exports Imports ALGERIA 31,764 0 31,764 AZERBAIJAN 19,195 0 19,195 BANGLADESH 0 18,654 -18,654 BRAZIL 136,797 0 136,797 BULGARIA 5,317 14 5,302 CHINA 0 62,011 -62,011 ESTONIA 18,755 0 18,755 FIJI 0 6,018 -6,018 HONG KONG 0 10,990 -10,990 INDIA 7,978 0 7,978 INDONESIA 40,393 2,695 37,697 ITALY 24,859 0 24,859 JAPAN 89,596 0 89,596 KAZAKHSTAN 5,630 0 5,630 KOREA 52,111 0 52,111 KYRGYZSTAN 3,401 0 3,401 MALAYSIA 176,667 126,073 50,594 NEPAL 0 41 -41 NETHERLANDS 3,943 0 3,943 NEW CALEDONIA 0 0 0 ROMANIA 9,000 0 9,000 RUSSIA 29,429 0 29,429 TAIWAN 8,439 0 8,439 TURKMENISTAN 13,294 0 13,294 UNITED ARAB 86,030 0 86,030 EMIRATES UNITED STATES 0 0 0 VIETNAM 5,019 201 4,819 TOTAL 767,616 226,698 540,918 (Data from Enterprise Singapore) (Reporting by Jeslyn Lerh; Editing by Tomasz Janowski)