26-08-2016

Asia Fuel Oil-Singapore supplies drop but fuel oil markets remain steady

AsiafuelO

The front-month time spreads of Singapore’s 380-cst fuel oil markets remained largely unchanged on Thursday despite a third consecutive week of declines in onshore Singapore supplies of fuel oil.

While some market participants were surprised by the markets indifference to the stock draws, others said that while inventories have come off their record highs set in early June and become more balanced, supplies are still skewed towards the ample side and arbitrage volumes are expected to rise over the next couple of months.

Onshore supplies of Singapore fuel oil fell by 2.16 million barrels, equivalent to about 322,000 tonnes, in the week to Aug. 25 to a seven-month low of 21.43 million barrels, or 3.2 million tonnes, the latest official data showed.

In the week to Aug. 17, onshore inventories fell by 2.68 million barrels, equivalent to about 400,000 tonnes.

Despite the inventory draw, the Sept/Oct time spreads of 380-cst fuel were unchanged from the previous session, trading at parity to Singapore quotes on the Intercontinental Exchange (ICE) by 1630 Singapore time, industry sources said.

Premiums of the 380-cst Oct/Nov time spreads were also little changed, slipping just 5 cents from the previous day to 20 cents above Singapore quotes.

Meanwhile, opportunities for arbitrage cargoes from the West narrowed after the front-month East-West (EW) spreads, the price difference between FOB Singapore 180-cst high-sulphur fuel oil and FOB Rotterdam barge fuel oil with maximum 3.5 percent sulphur, slipped to $17 a tonne, down from $18.25 a tonne on Wednesday.

At the start of last week, EW spreads jumped more than $4 to $19.25, opening up arbitrage opportunities from the West.

RELATED NEWS:

– China’s July crude stockpile fell 5.7 percent on month to 28.9 million tonnes, its lowest level since April 2013, as producers in one of the world’s top energy markets curbed output, while diesel supplies swelled, official data showed on Thursday.

– Iran and Ecuador on Wednesday discussed ways that the two countries can strengthen oil prices as Iran signals it may support joint efforts by exporters to prop up flagging crude.

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

 FUEL OIL                                                                                
 CASH ($/T)                 ASIA CLOSE       Change   % Change  Prev      RIC
                                                                Close     
 Cargo - 180cst                      253.88    -1.95     -0.76    255.83  FO180-SIN
 Diff - 180cst                         0.87     0.04      4.82      0.83  FO180-SIN-DIF
 Cargo - 380cst                      248.08    -1.86     -0.74    249.94  FO380-SIN
 Diff - 380cst                        -0.16     0.13    -44.83     -0.29  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst           249.58    -1.36     -0.54    250.94  BK380-B-SIN
 Bunker (Ex-wharf) Premium             1.50     0.50     50.00      1.00

Source: Reuters

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