23-07-2016

Asia Fuel Oil-380-cst cash discounts and contango end week wider

AsiaFuel

Cash discounts and the front-month time spread contango of Asia’s 380-cst fuel oil weakened over the week to July 22 as suppliers sought
to off-load cargoes at more aggressive discounts amid a stubborn growth in fuel oil inventories, traders said.

Despite expectations of constricted fuel oil supplies into Singapore, onshore stocks of Singapore fuel oil STKRS-SIN have been on the rise since the start of the month to a total of 28.239 million barrels (approximately 4.2 million tonnes) in the week to July 20, according to the latest official data.

Still, the drop-off in arbitrage volumes over the past three consecutive months has failed to cause any supply constraints in the Singapore trading hub as there is plenty of fuel stored offshore in tankers.

Cash discounts of the 380-cst fuel oil settled at $2.02 a tonne to Singapore quotes on Friday, 42 cents wider than the start of the week but 5 cents narrower from Thursday.

In the swaps market, the 380-cst Aug/Sept time spread widened its contango every session this week, starting from a 50 cent contango on Monday and settling at minus $1.50 a tonne to Singapore quotes on Friday.

RELATED NEWS:

– SK Innovation Co Ltd, which owns South Korea’s top refiner SK Energy, expects Asian margins to improve slightly in the second half of 2016 as more refineries shut for maintenance in autumn, leading to tighter supply of oil products.

– A ballooning spread between the price of U.S. and European oil, coupled with lower shipping costs, has traders scrambling to take advantage of what may be a brief window of opportunity to ship crude to higher priced markets.

– Iraq’s oil exports are set to rise in July, according to loading data and an industry source, putting supply growth from OPEC’s second-largest producer back on track after two months of declines.

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                     235.24    -7.08     -2.92    242.32  FO180-SIN
 Diff - 180cst                       -0.23     0.38    -62.30     -0.61  FO180-SIN-DIF
 Cargo - 380cst                     226.66    -7.65     -3.26    234.31  FO380-SIN
 Diff - 380cst                       -2.02     0.07     -3.35     -2.09  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst          227.96    -7.85     -3.33    235.81  BK380-B-SIN
 Bunker (Ex-wharf) Premium            1.30    -0.20    -13.33      1.50

Source: Reuters

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