02-08-2016

Asia Fuel Oil-Contango recovers after Asia trading, cash discounts widen

AsiaFuelO

The contango structure of Asia’s 380-cst fuel oil for prompt month time spreads saw volatile trading on Monday but recovered from its losses after Asian trading amid expectations of tightening supplies over the near-term, traders said.

The 380-cst Aug/Sept time spreads sank to as low as minus $2.25 a tonne to Singapore quotes on the Intercontinental Exchange (ICE) during Asian trading hours which settle at 1630 Singapore time (0930 GMT) but then recovered to a contango of minus $1.65 to tonne
one hour later, industry sources said.

“There was some selling pressure during normal (trading) hours but after that the market rebounded,” said a Singapore-based trader.

“Now that near-term supplies are seen as tightening, the contango should be narrowing, not widening.”

In physical markets, cash discounts of 380-cst fuel oil were also weighed down by escalating selling pressure.

Five cash deals were reported in the Platts window totalling 100,000 tonnes of 380-cst fuel oil that were concluded at discounts between $2.25 and $2.50 a tonne to Singapore quotes, sources said.

This compares to four cash deals on Friday totalling 80,000 tonnes of the fuel, all executed at a $1.75 a tonne discount to Singapore quotes.

In other news, the Maritime and Port Authority of Singapore (MPA) revoked the bunker fuel supplier and bunker craft operator licences of AC Oil Pte Ltd, after investigations showed discrepancies and wrongful declarations in the records kept on board its tankers.

TENDERS & AWARDS:
– Bangladesh Petroleum Corp (BPC) has received offers in its first tender to buy fuel oil at premiums lower than its term deals, two company sources said on Sunday.

The tender was issued as part of an effort to move away from direct-term deals with fuel products suppliers in a bid to buy at cheaper rates.

– State-owned Indian Oil Corporation (IOC) has sold 15,000 tonnes of 180-cst fuel oil to Vitol for loading between Aug. 25 and 27 from the port of Haldia, industry sources said.

The pricing level of the tender is unknown.

– Meanwhile, IOC is offering another 30,000 tonnes of 180-cst fuel from Kandla port for delivery between Aug. 20 and 22.

The tender closes on Aug. 1.

RELATED NEWS:
– Saudi Arabia has slashed the September price for its Arab Light crude oil for Asian customers by $1.30 a barrel, the largest cut for the flagship grade in nearly a year, helping to shore up sales ahead of fall in demand in October.

– OPEC’s oil output is likely in July to reach its highest in recent history, a Reuters survey found on Friday, as Iraq pumps more and Nigeria manages to export additional crude despite militant attacks on oil installations.

SINGAPORE CASH DEALS – Five cash deals reported. For further details, please see

 FUEL OIL                                                                                
 CASH ($/T)                 ASIA CLOSE      Change   % Change  Prev      RIC
                                                               Close     
 Cargo - 180cst                     221.85     3.22      1.47    218.63  FO180-SIN
 Diff - 180cst                       -1.79     0.08     -4.28     -1.87  FO180-SIN-DIF
 Cargo - 380cst                     215.14     2.10      0.99    213.04  FO380-SIN
 Diff - 380cst                       -2.45    -0.70     40.00     -1.75  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst          215.94     1.90      0.89    214.04  BK380-B-SIN
 Bunker (Ex-wharf) Premium            0.80    -0.20    -20.00      1.00

Source: Reuters

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