30-06-2016

Asia Fuel Oil-Fuel oil markets boosted by tightening supplies

fueloil

Singapore fuel oil markets firmed on Wednesday, with the front month time spreads, the front month fuel oil cracks as well as physical cash discounts all rising to multi-week highs due to tightening near-term supplies, traders said.

In the futures market, the front month July-August time spreads narrowed their contango structure to 75 cents a tonne to Singapore quotes, up $1 a tonne from yesterday’s close and up $1.50 since the start of the week.

The contango structure in the front month time spreads is now at its narrowest since May 5.

On the Intercontinental Exchange (ICE), fuel oil futures were actively traded as June drew nearer to an end.

“The August-September (time) spread is on fire and flipped into backwardation,” said one Singapore-based trader. “This is something we don’t see even when there is bull play.”

By the end of Singapore physical trading hours in the Platts window at 0930 GMT, futures trading volumes on ICE were at about 425,000 tonnes for the July-August spreads and 660,000 tonnes for the August-September contracts, the trader said.

Similarly, the front month 180-cst fuel oil crack to Dubai crude rose for a twelfth consecutive session on Wednesday to its highest level since Feb. 18 at $5.07 a tonne.

“Cracks are very strong indeed despite the recent volatility in crude prices,” said another Singapore trader.

Strong bidding interest in the physical markets saw cash discounts of the 380-cst fuel oil contract to $1.11 a tonne to Singapore quotes, its narrowest since May 11.

Bidders for the 380-cst fuel oil strongly outnumbered sellers, with 13-1 standing bids to offers at the close of the Platts window, industry sources said.

No 380-cst fuel oil cash deals were reported on Wednesday in the Platts window.

TENDERS & AWARDS:
The UAE’s national oil company, ADNOC, awarded four fuel oil cargoes to three different buyers for delivery throughout July, industry sources said.

South Korean refiner GS-Caltex purchased two medium-sulphur fuel oil (MSFO) cargoes totalling 90,000 tonnes while Saudi Aramco’s trading arm, Saudi Aramco Products Trading Company (ATC) took a third 45,000 tonne MSFO cargo. All MSFO cargoes were reported to have been sold at a discount of $10 to $15 a tonne to Mean of Platts Arabian Gulf quotes.

The fourth cargo, 50,000 tonnes of low-sulphur fuel oil (LSFO), was bought by Vitol for an unknown price, sources said.

– State-owned Bahrain Petroleum Company (Bapco) is offering 60,000 tonnes of 380cst high sulphur fuel oil for loading at the port of Sitra between July 25 and 28, industry sources said.

SINGAPORE CASH DEALS – One cash deal reported. For further details, please see

 FUEL OIL                                                                                
 CASH ($/T)                 ASIA CLOSE       Change   % Change  Prev      RIC
                                                                Close     
 Cargo - 180cst                      255.47    13.89      5.75    241.58  FO180-SIN
 Diff - 180cst                        -1.81     0.59    -24.58     -2.40  FO180-SIN-DIF
 Cargo - 380cst                      251.13    13.18      5.54    237.95  FO380-SIN
 Diff - 380cst                        -1.11     0.68    -37.99     -1.79  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst           252.13    13.78      5.78    238.35  BK380-B-SIN
 Bunker (Ex-wharf) Premium             1.00     0.60    150.00      0.40

Source: Reuters

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