27-09-2016

Asia Fuel Oil-Thin, little expected from Algiers meeting

AsiafuelO

Trade was limited on Monday and market sentiment was weighed down by uncertainty in the crude oil markets as the world’s largest producers gathered in Algeria with a possible production frieze on the agenda.

“The mood here is sombre. Most traders are pessimistic and feel that prices may drop further,” said a Singapore-based trader given the decline in swap prices on Monday in the wake of lower crude oil prices during Asia trading hours.

“The (fuel oil) market is dead quiet today, everyone’s staying on the sidelines for now until a clearer direction emerges,” said another Singapore-based trader.

Despite the gloomy sentiment and limited liquidity, the market structure of 380-cst improved slightly on the Intercontinental Exchange (ICE) supported by expectations of below average arbitrage supplies into Singapore, industry sources said.

The near term Oct/Nov and Nov/Dec time spreads of the 380-cst fuel oil were each 10 cents higher from their previous close, trading at $1.35 and 95 cents a tonne above Singapore quotes at 17:15 Singapore time (09:15 GMT), sources said.

Western fuel oil arrivals into East Asia for October have been provisionally assessed at 3.2 to 3.4 million tonnes, well below revised September volumes at 3.9 to 4.0 million tonnes, according to assessments by Thomson Reuters Supply Chain and Commodities Research.

In the physical markets, no cash deals were report in the Platts window, however there was a growing divergence between buyers and sellers on Monday.

“Buyers bids got weaker in the window while sellers offers got stronger,” said a third Singapore-based trader. “Looks like neither buyers or sellers are too eager to commit to anything right now.”

RELATED STORIES:
– China’s August fuel stockpile fell 9.8 percent on month to 17.3 million tonnes, the lowest level this year, led by a sharp decline in diesel inventory, official data showed on Monday.

– Russian idle primary oil refining capacity planned for September rose by 8 percent to 3.092 million tonnes compared to 2.863 million tonnes in the previous plan, Energy Ministry data and Reuters calculations showed on Friday.

– All options are possible for OPEC concerning an output cut or freeze with producers agreed on the need to stabilize the market, Algerian Energy Minister Noureddine Bouterfa said on Sunday.

– Saudi Aramco is forecast to spend about $334 billion on various sectors including materials and services such as infrastructure and projects to maintain oil capacity by 2025, an Aramco official said on Monday.

SINGAPORE CASH TRADES: No cash deals reported. For further details, please see

 FUEL OIL                                                                                 
 CASH ($/T)                 ASIA CLOSE      Change   % Change   Prev       RIC
                                                                Close      
 Cargo - 180cst                     256.11    -6.25      -2.38     262.36  FO180-SIN
 Diff - 180cst                        1.90     0.04       2.15       1.86  FO180-SIN-DIF
 Cargo - 380cst                     248.95    -5.85      -2.30     254.80  FO380-SIN
 Diff - 380cst                        0.58     0.03       5.45       0.55  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst          251.45    -5.85      -2.27     257.30  BK380-B-SIN
 Bunker (Ex-wharf) Premium            2.50     0.00       0.00       2.50

Source: Reuters

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