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Leading marine fuel supplier Chemoil Energy Ltd. has today warned that it could post a first quarter loss following a period of poor fuel oil margins.

In a statement to the Singapore Exchange (SGX), Chemoil said "The business operations of the group have been negatively impacted by continued weak fuel oil margins in many of our market segments worldwide. The company continues to gather relevant data and will provide a more detailed review of the financial performance when announcing the Q1 2010 unaudited consolidated financial results in May 2010."

The fuel oil market weakened in early April due to heavy arbitrage inflows from the West.

According to data for the week ending April 21st, stock levels in Singapore reached a record 25.7 million barrels, as Western supplies outpaced demand in Asia.

This month, six-month high arbitrage volumes of 3.7-3.9 million tonnes are calculated to have arrived with 2.9-3.0 million tonnes slated for May.

The market began rebounding last week following signs of diminishing supplies in June and supported by buying interest from commodity trader Glencore and oil major BP.

The latest financial update from Chemoil follows the recent release of the company's results for 2009, which saw net profit fall by 35.6 million, or 75.6 percent, to US$11.5 million from $47.1 million in 2008.

Sales revenue during the 12-month period decreased by 33.6 percent to $5,750.2 million from $8,662.1 million in 2008, whilst total sales volumes were down by 8.5 percent from 16.5 million tonnes in 2008 to 15.1 million tonnes last year. This was said to be due to lower wholesale volumes in Europe and the Americas combined with lower ex-wharf volumes in Asia.

Meanwhile, during the last quarter, Chemoil achieved a net profit of $2.9 million, which was $9.4 million, or 76.4 percent, below the $12.3 percent profit gained during the corresponding period the previous year.

The gross contribution per metric tonne during this period dropped by 29.5 percent, from $8.97 to $6.32. However, sales revenue rose by 45.2 percent to $1,839.8 million from $1,267.4 million in 2008.

Sales volumes of marine fuel also rose by 5.3 percent to 4 million metric tons from 3.8 million metric tonnes during the last three months of 2008.