15-09-2016

Asia Fuel Oil-Traders see a flurry of trading on higher fuel oil prices

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Marginally higher fuel oil prices led to a flurry of trading in Singapore on Wednesday as traders took opposing views on the short-term direction of the market.

Six trades for 380-cst high sulphur fuel oil were reported in the Platt’s window, although there were more than double that number of bids and offers.

“A couple of traders are dumping. It’s the see-saw game,” said a Singapore-based fuel oil trader.

“Sellers think prices have more to fall and want to make a profit, while buyers think prices are going to rise and want a bargain”, he said. “Margins are razor thin for traders.”

Discounts for 380-cst fuel narrowed, indicating traders thought there could be tightness in the market, but premiums for 180-cst slipped, suggesting there are adequate supplies.

“The Singapore market is still well-balanced, but people are a little more confident there could be an oversupply situation developing, hence the discounts that are being offered,” a second Singapore trader said.

Traders said Chinese state oil refiners are being more assertive in seeking foreign buyers for fuel oil volumes in China, indicating the market could be awash with product amid weak domestic market conditions.

“It is rare for Sinopec Beijing to contact me for business,” the first trader said.

That came as China’s state oil refiners are gearing up to export more diesel and gasoline in the coming months even as the week-long National Day holiday in two weeks and the looming winter season is likely to support demand.

RELATED NEWS:
Japanese oil refiner Idemitsu Kosan Co said on Wednesday it expected to take about half a month to restart all units at its 175,000 barrels-per-day (bpd) Aichi refinery in central Japan following an unplanned shutdown last week after a power blackout.

Vietnam’s Dung Quat refinery, capable of refining 6.5 million tonnes of crude, is set for a 52-day shutdown starting June 2017, Tran Ngoc Nguyen, chief executive of state-owned Binh Son Refining and Petrochemical Co. told Reuters on Wednesday.

SINGAPORE CASH TRADES: Six deals reported:
– Shell bought 20,000 tonnes of 380-cst high sulphur fuel oil from Mercuria at a discount of 50 cents to Singapore prices for delivery between Sept. 29-Oct. 3.

– BP bought 40,000 tonnes of 380-cst high sulphur fuel oil from Mercuria at a discount of 50 cents to Singapore prices for delivery between Sept. 30-Oct. 4.

– Vitol bought 20,000 tonnes of 380-cst high sulphur fuel oil from Coastal at a discount of 75 cents to Singapore prices for delivery between Oct. 3-7.

– Hin Leong bought 20,000 tonnes of 380-cst high sulphur fuel oil from Mercuria at the balance of September average prices for delivery between Sept. 29-Oct. 3.

– Hin Leong bought 20,000 tonnes of 380-cst high sulphur fuel oil from Mercuria at the balance of September average prices for delivery between Oct. 4-8.

– Hin Leong bought 20,000 tonnes of 380-cst high sulphur fuel oil from Mercuria at the balance of September average prices for delivery between Oct. 9-13.

 FUEL OIL                                                                        
 CASH ($/T)           ASIA CLOSE    Change    %        Prev      RIC
                                              Change   Close     
 Cargo - 180cst             254.51      0.63     0.25    253.88  FO180-SIN
 Diff - 180cst                0.19     -0.65   -77.38      0.84  FO180-SIN-DIF
 Cargo - 380cst             248.26      1.76     0.71    246.50  FO380-SIN
 Diff - 380cst               -0.42      0.22    34.38     -0.64  FO380-SIN-DIF
 Bunker (Ex-wharf)-         250.15      2.19     0.88    247.96  BK380-B-SIN
 380cst                                                          
 Bunker (Ex-wharf)            1.89      0.43    29.45      1.46                  
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Source: Reuters

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