18-03-2016

Asia Fuel Oil-Buying interest supports 380cst premiums; time spreads drop

fueloil

The bullish trend in the physical Singapore fuel oil markets continued on Wednesday, maintaining cash cargoes in premium territory despite a slowdown in swaps market volumes, traders said.

Despite shedding Tuesday’s gains, strong bidding maintained differentials of 380cst fuel oil at a premium of $1.71 above Singapore quotes.

Fourteen cash deals were reported on Wednesday, totalling 300,000 tonnes of 380cst fuel oil.

Glencore was the lead buyer again with eight cargoes totalling 180,000 tonnes. Petrochina bought 60,000 tonnes through three cargoes, while Mercuria took two cargoes of 20,000 tonnes each and CAO purchased the remaining 20,000 cargo.

Since the beginning of March a total of 3.78 million tonnes of fuel oil has been traded in Platts’ Market on Close price assessment process, industry sources said.

By contrast, bullish momentum in the swaps markets was said by traders to have slowed significantly on Wednesday, with time spreads across a multitude of months weakening amid little buying interest.

Front-month balance of April-May time spreads weakened to a discount of $3.25 a tonne to Singapore quotes, down $1 from yesterday.

Singapore, the world’s top bunkering port, is in the midst of its first big fuel oil trading play since mid-2015, with nearly the same handful of traders buying and selling huge volumes of the shipping fuel, setting up wide swings in prices and spreads.

RELATED NEWS:

– As feared, the increase in Iran’s oil production has continued after sanctions have been lifted. Iran’s agreement to a freeze would only come when it reached 4 million barrels per day production, said Phillip Futures in its daily energy report on Wednesday.

“Moving forward, we highly doubt there would be any voluntary cuts from OPEC countries, thus, would be expecting OPEC overall production to be increase due to Iran,” said the report. “This would most likely be bearish for oil prices.”

– Russian oil firm Rosneft said it had agreed with India’s Essar Oil Limited to start crude oil deliveries this year.

Rosneft also said in a statement that it intended to sign and close a transaction to buy into the equity of Essar by the end of June 2016 upon obtaining all necessary permits.

TENDERS AND AWARDS:

Pakistan’s Pakistan State Oil (PSO) has purchased multiple cargoes of high sulphur fuel oil in lots of 65,000 tonnes each from Petrochina and Glencore, sources said.

SINGAPORE CASH DEALS – Fourteen deals reported. For details, please see

 FUEL OIL                                                                                            
 CASH ($/T)                 ASIA CLOSE         Change     % Change     Prev Close   RIC
 Cargo - 180cst                        170.91      -1.92        -1.11       172.83  FO180-SIN
 Diff - 180cst                          -0.35      -0.57      -259.09         0.22  FO180-SIN-DIF
 Cargo - 380cst                        168.42      -4.37        -2.53       172.79  FO380-SIN
 Diff - 380cst                           1.71      -1.47       -46.23         3.18  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst             167.22       0.00         0.00       167.22  BK380-B-SIN
 Bunker (Ex-wharf) Premium              -1.20       4.37       -78.46        -5.57

Source: Reuters 

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