04-08-2016

Asia Fuel Oil-Physical liquidity increases on strong buying interest

AsiaFuelO

Physical liquidity in the Platts window rose to a near three-month high on Wednesday on strong buying interest ahead of expectations of tighter supplies as the arbitrage window remains shut, traders and industry sources said.

Nine cash trades were reported in the Platts window, totalling 180,000 tonnes of 380-cst and 180-cst fuel oil, the highest in number and volume since May 11 when 200,000 tonnes of the fuel exchanged hands in 10 deals, data compiled by Thomson Reuters showed.

“All of the nine deals were offers being lifted and that shows strong buying interest,” a Singapore trader said.

Gunvor was the lead buyer, lifting five of the seven 380-cst fuel oil deals while Vitol and Hin Leong took the remaining two. Glencore sold three of those cargoes, followed by Mercuria with two then PetroChina and China Aviation Oil with one each, sources said.

By contrast, Glencore was the only buyer of the remaining two 180-cst fuel oil cargoes supplied by KIB and Gunvor.

Following three months of declining arbitrage flows into Singapore, fuel oil supplies into the trading hub are expected to tighten over the near term amid lower Western output and a persistently shut arbitrage window.

However, Singapore’s near-dated time spreads, East-West arbitrage spreads and cash differentials FO380-SIN-DIF have been slow to reflect market expectations of constricting supplies, traders said.

“Fuel oil stock draws in the U.S. and Europe are declining and Middle East exports are way down due to domestic demand for power generation, all this points to narrower supplies in East Asia as a net importer,” said another Singapore trader.

“Technically, we should start seeing (the 380-cst) Aug/Sept and Sept/Oct time spreads and cash discounts narrow very soon, but who knows,” the trader said.

RELATED NEWS:

– Libya’s National Oil Corporation, which hopes to more than quadruple the country’s oil output by the end of this year, remains wary that promises to reopen blockaded ports could be broken, the NOC chief in Tripoli told Reuters on Tuesday.

– China will make efforts to cut overcapacity in its petrochemical industry by shutting down outdated plants and consolidating production in the sector, China’s cabinet said on Wednesday.

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

 FUEL OIL                                                                                  
 CASH ($/T)                  ASIA CLOSE        Change   % Change  Prev      RIC
                                                                  Close     
 Cargo - 180cst                        209.57    -3.19     -1.50    212.76  FO180-SIN
 Diff - 180cst                          -1.58     0.51    -24.40     -2.09  FO180-SIN-DIF
 Cargo - 380cst                        203.93    -2.89     -1.40    206.82  FO380-SIN
 Diff - 380cst                          -2.09     0.25    -10.68     -2.34  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst             205.23    -3.09     -1.48    208.32  BK380-B-SIN
 Bunker (Ex-wharf) Premium               1.30    -0.20    -13.33      1.50

Source: Reuters

Previous Next