Lower global oil prices scared away Asian fuel oil traders on the expectation prices would fall further, while holidays in East Asia also weighed on trading activity, traders said.
Oil prices have fallen 8-9 percent in just one week amid renewed concern of global oversupply after the return of Libyan and Nigerian exports and rising exports from Iran.
With Brent oil falling below $46 a barrel on Friday, traders are expecting crude and fuel oil prices to drop, the trader said.
“Nobody wants to do any business for fear they’ll make the wrong market call,” said a Singapore fuel oil trader. “If they buy now they are worried they’ll be burned if prices fall.”
There were no physical fuel oil trades in the Platt’s window that was despite around 22 bids, double the number of offers trading data showed.
Average fuel oil swap prices lagged the wider crude oil market, rising $3-$4 on Friday compared with the previous session while crude prices fell around 1.5-2 percent.
Spreads for 180 and 380-cst high sulphur fuel have widened slightly this week to 75 cents on Friday, from 25 cents on Wednesday, indicating more plentiful supply.
That came as Singapore overall refining margins to Dubai crude hit $6.92 a barrel on Sept 15, the highest since Mar. 30.
“It all adds to the sense of uncertainty on which way the fuel oil market is heading,” the trader said.
Holidays in South Korea and China today and Thursday and Japan next week have dampened trading activity.
“Even bunker enquiries have gone soft,” a further Singapore trader said.
Iran’s August crude oil exports jumped 15 percent from July to more than 2 million barrels per day (bpd), according to a source with knowledge of its tanker loading schedule, closing in on Tehran’s pre-sanctions shipment levels of five years ago.
Freight rates for very large crude carriers (VLCCs) are set to climb next week as charterers ramp up tanker fixing activity from the Middle East while increased oil volumes from West Africa provided further support, ship brokers said.
SINGAPORE CASH TRADES: No trades.
FUEL OIL CASH ($/T) ASIA CLOSE Change % Prev Close RIC Change Cargo - 180cst 252.78 4.62 1.86 248.16 FO180-SIN Diff - 180cst 0.91 0.72 378.95 0.19 FO180-SIN-DIF Cargo - 380cst 245.38 3.40 1.41 241.98 FO380-SIN Diff - 380cst -0.16 0.00 0.00 -0.16 FO380-SIN-DIF Bunker (Ex-wharf)- 249.21 3.77 1.54 245.44 BK380-B-SIN 380cst Bunker (Ex-wharf) 3.83 0.37 10.69 3.46 Premium
Source: ReutersPrevious Next
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