Marine fuel supplier Chemoil Energy (CHEL.SI) said on Friday its earnings had been hit by the languishing fuel oil market and warned that it would incur a net loss for the March quarter. 

“The business operations of the Group have been negatively impacted by continued weak fuel oil margins in many of our market segments worldwide,” it said in a statement to the Singapore Exchange. 

 

Asian fuel oil fundamentals were depressed earlier this month, due to heavy shipments from the West for the months of March to April, with the the supply balance tilted towards lower-quality grades.  

 

Its front-month cracks fell to its lowest level in 10 months at a discount near US$9.00 ($9.57) a barrel in early April, sharply lower than the US$1.00-$3.00 discount range seen in January and February. 

 

The market started rebounding last week, lifted by signs of shrinking supplies in June and supported by buying interest from oil major BP and European trader Glencore. 

 

The product’s prompt May crack has also recovered to around a US$7.00 a barrel discount, though still weaker than levels seen two months ago. 

 

Last December, Glencore agreed to buy a 51% stake in Chemoil and offered to buy all remaining shares, a move which gives it storage assets and trading leverage. 

 

Its shares rose 1.3% to 40 cents on Friday. The stock has risen 2.6% since the start of the year, hitting an intraday high of 45.5 cents on April 19.