02-09-2016

Asia Fuel Oil-Bullish sentiment reinforced by inventory fall

AsiafuelO

The bullish mood in Singapore’s fuel oil markets was reinforced on Thursday by official data showing that onshore inventories had fallen to 18-month lows after months of lower than usual arbitrage supplies.

“Inventory levels are finally looking a lot more balanced, maybe even a bit on the tight side, improving sentiment over the
near term until replacement barrels start flowing back in a few weeks,” said a trader in Singapore.

Onshore Singapore fuel oil supplies fell 868,000 barrels, or about 130,000 tonnes, in the week to Aug. 31 to an 18-month low of 20.56 million barrels, or 3.1 million tonnes, according to International Enterprise (IE) Singapore data on Thursday.

Onshore fuel oil supplies have been on the decline over the past four weeks, falling by 6.18 million barrels, or 923,000 tonnes, in August from a record high of 31.18 million barrels, or 4.65 million tonnes, in the week to June 1.

Western fuel oil arrivals into East Asia for September have closed at 3.6-3.8 million tonnes, up 10 percent from August, based on the latest assessments by Thomson Reuters Supply Chain and Commodities Research.

The prompt month Sept/Oct time spreads of Singapore’s 380-cst fuel oil markets on the Intercontinental Exchange (ICE) rose 25 cents from Wednesday to a backwardation of $1.50 a tonne by 0900 GMT, according to industry sources.

Similarly, the Oct/Nov and Nov/Dec time spreads of the 380-cst fuel climbed 30 cents each to a backwardation of $1.30 and 55 cents respectively.

In the physical markets, cash premiums of the 380-cst fuel were 34 cents a tonne lower at 94 cents a tonne above Singapore quotes.

The premiums were weighed down by three cash deals done in the Platts window at a flat price between $243.50 and $244 a tonne. That translates into a weaker floating price ranging from 30 cents to 85 cents a tonne above Singapore quotes, industry sources said, adding that bidding interest was still strong.

RELATED NEWS:
– Saudi Arabia’s minister of foreign affairs said on Thursday that it would be reasonable for the kingdom to go along with other producers in changes to oil production.

– Saudi Aramco and the Japanese government are set to agree on a roughly 2 million barrel expansion of crude storage capacity in Okinawa, used by the state-run firm to store oil, Saudi Aramco CEO Amin Nasser said on Thursday.

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

 FUEL OIL                                                                                
 CASH ($/T)                 ASIA CLOSE      Change   % Change  Prev      RIC
                                                               Close     
 Cargo - 180cst                     250.33    -8.09     -3.13    258.42  FO180-SIN
 Diff - 180cst                        1.32    -0.25    -15.92      1.57  FO180-SIN-DIF
 Cargo - 380cst                     244.23    -7.74     -3.07    251.97  FO380-SIN
 Diff - 380cst                        0.94    -0.34    -26.56      1.28  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst          247.23    -6.94     -2.73    254.17  BK380-B-SIN
 Bunker (Ex-wharf) Premium            3.00     0.80     36.36      2.20

Source: Reuters 

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