Asia’s low sulfur fuel oil refining margin plunged to its weakest in three months Nov. 2, weighed down by expectations of increasing regional supplies amid lackluster bunkering demand.

The Asian LSFO market sentiment has been sluggish since the onset of trading of second-half November loading cargoes due to expectations of relatively higher Western arbitrage inflows East and steady regional output. The market has been further bogged down by less-than-robust demand from the downstream end-user marine fuel market, traders said.

Platts front month crack spread for Singapore marine fuel 0.5% sulfur against Brent crude plunged to $7.68/b at the Asian close Nov. 2, the lowest since Aug. 3, when it touched $6.60/bbl, S&P Global Commodity Insights data showed.

The marine fuel crack for November was pegged at $7.65/b mid-morning Nov. 3.

Platts assessed Singapore marine fuel 0.5%S cash differential over Mean of Platts Singapore marine fuel 0.5%S swaps at $9.17/mt at the Asian close Nov. 2, the lowest since Sept. 21, when it was assessed at $5.50/mt, S&P Global data showed. The marine fuel cash premium, which averaged $17.94/mt in October, dropped 51.4% in the last two weeks.

“The LSFO cash differentials would likely weaken a bit further; there are more supplies coming in, while bunkering demand is not that great,” a Singapore-based trader said.

The fourth quarter typically sees an uptick in bunker demand ahead of the year-end festive season, but market sources said there has not been any major seasonal upswing in bunkering so far and activity would likely remain frail through the end of the year.

Singapore is expected to receive 1.5 million-1.8 million mt of LSFO from the West in November, an uptick from 1.2 million-1.5 million mt of fuel oil arrivals in October, while regional refineries returning from autumn turnarounds are also expected to ramp up supply, traders said.

Singapore marine fuel 0.5% sulfur balance November-December swaps time spread was pegged at $10.25/mt in mid-morning trade Nov. 3, according to brokers, compared with Platts $9.45/mt assessment at the Asian close Nov. 2, S&P Global data showed.

Downstream, Platts Singapore-delivered marine fuel 0.5%S bunker premium over benchmark Singapore marine fuel 0.5% cargo values, which averaged $35.46/mt in October, dropped for a second straight session to $28.21/mt at the Asian close Nov. 2, S&P Global data showed.

Marex Media