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Commodity trading entity Noble Group is expected to begin selling marine fuels in Singapore from next month, news agency Reuters reports.

According to market sources, Noble, which began its physical fuel oil trading operations last year, has received its first cargo of fuel oil and is due to commence selling bunker fuels in May.

Following several months searching for a supertanker to lease, Noble has leased the converted Very Large Crude Carrier (VLCC) Hercules from Malaysia's Arus Dermaga, which operates two floating storage facilities in the region.

The 270,000-tonne capacity vessel is understood to be anchored off Malaysia's Tanjung Pelepas port, having begun operations at the start of April.

The new fuel oil cargo of around 100,000 tonnes of high-viscosity fuel oil from the Caribbean is reported to have completed discharging onto Noble's new VLCC on Wednesday.

Market Entry

Noble began its fuel oil trading business in April 2009, after hiring five former Trafigura traders, headed by Magd Mohaffel, Trafigura's former global head of fuel oil.

It was thought that Noble Group's entry into the fuel oil market was linked to the expectation that refinery upgrade projects in Asia and Europe could potentially lead to high trading margins due to tightening supplies of residual fuel.

Over the past twelve months, the company has also hired teams to trade other oil products in the Asian market, including naphtha, distillates and gasoline, and is expected to have a crude trading team in place later this year.

As part of its fuel oil trading strategy, Noble had been seeking a long-term storage lease. However, despite a jump in commercial capacity, Noble found that existing storage tanks had already been taken on long-term leases.

Following the addition of the Hercules this month, Noble is expected to actively seek cargoes to fill its VLCC. It is thought that the commodity trader may start buying cargoes from other local players who import fuel oil into the Singapore market.

Singapore is currently flooded with product following a rise in fuel oil inventories for the fourth consecutive week. The current market climate could help Noble to secure product at a cheaper price.

According to data relased International Enterprise for the week ending April 14th, stock levels reached a record 25.22 million barrels, as Western supplies outpaced demand in Asia.

This month, six-month high arbitrage volumes of 3.8-3.9 million tonnes are due to arrive with 2.9- 3.0 million tonnes slated for May.