26-07-2016

Asia Fuel Oil-Fuel oil contango narrows, ex-wharf premiums rise

AsiaFuelO

The front month Aug/Sept time spreads for benchmark 180-cst and 380-cst fuel oil both narrowed their contango structures on Monday amid relatively muted trading activity while ex-wharf premiums rose as demand remained firm, traders said.

The 180-cst spread was 25 cents narrower at minus 50 cents a tonne to Singapore quotes, while 380-cst narrowed by 25 cents to a $1.25 a tonne contango, Thomson Reuters data showed.

Ex-wharf premiums for 380-cst fuel oil widened to $2.60 a tonne to Singapore quotes on Monday, or about $230 a tonne in flat-price terms, reaching the highest level since April 18 thanks to firm demand for bunker fuels, industry sources said.

The high ex-wharf premiums relative to cargo differentials encouraged suppliers to offer into the break-bulk ex-wharf market, which commands a premium of about $4 to $5 a tonne to Singapore quotes compared with the cargo market.

Cash discounts on 380-cst fuel oil FO380-SIN-DIF were steady at $2.13 a tonne below Singapore quotes, 11 cents lower than in the previous session.

Only one cash deal was reported in the Platts window on Monday after Hin Leong bought 20,000 tonnes of the 830-cst fuel from Mercuria for Aug. 15-19 delivery at $227 a tonne.

REFINING MARGINS TO IMPROVE:
South Korea’s S-Oil Corp said it expects refining margins to improve in the second half of the year, driven by a pick-up in Asian demand for gasoil and kerosene for heating during the winter months.

The refiner plans to start maintenance at its 90,000 bpd No.1 crude oil distillation unit (CDU) and residue fluid catalytic cracker (RFCC) this quarter or early in the next quarter for about a month. It expects minimal impact on third-quarter output.

TENDERS & AWARDS:
– State-owned Bahrain Petroleum Company (Bapco) is offering 60,000 to 80,000 tonnes of 380-cst high-sulphur fuel oil for Aug. 13-16 loading at the port of Sitra, industry sources said.

The tender closes on July 25 and is valid until the following day.

RELATED NEWS:
– China’s implied oil demand rose 2.9 percent from a year earlier to 11.06 million bpd in June, quickening from an increase of 1.7 percent compared with the previous month, Reuters calculations using official data showed.

– Libya’s hopes of boosting crude exports have been dealt a blow after the head of National Oil Corporation (NOC) objected to a deal between the government and local guards to reopen key ports.

– Mexico’s state-owned oil company Pemex will speed scheduled fuel imports as the complete shutdown of its fourth-largest refinery enters its fourth day, an official said on Friday.

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                     236.21     0.97      0.41    235.24  FO180-SIN
 Diff - 180cst                       -0.04     0.19    -82.61     -0.23  FO180-SIN-DIF
 Cargo - 380cst                     227.40     0.74      0.33    226.66  FO380-SIN
 Diff - 380cst                       -2.13    -0.11      5.45     -2.02  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst          230.00     2.04      0.89    227.96  BK380-B-SIN
 Bunker (Ex-wharf) Premium            2.60     1.30    100.00      1.30

Source: Reuters 

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