25-10-2016

Asia Fuel Oil-East-West spreads trade actively in cargo hedging

Asiafuelo

The 380-cst fuel oil East-West spreads were actively traded in the Intercontinental Exchange (ICE) on Monday as suppliers sought to hedge incoming cargoes and take positions on the visco spread, industry sources said.

“Volumes in general (on ICE) were very thin today but the visco was more active and about 100,000 tonnes worth of EW spreads traded on December before the (Platts) window,” said a Singapore-based paper trader.

The December 380-cst EW spread edged 5 cents higher on Monday from the previous session to $20.50 a tonne on ICE by 17:20 Singapore time (09:20 GMT) while the same month visco spread was 75 cents higher to $7.25 a tonne after trading more than 145,000 tonnes, sources said.

“Looks like some suppliers came in to sell the EW (spread) at the bid hedging a cargo,” said another Singapore trader adding that visco spreads had been attracting more attention recently.

In the physical markets, four cash deals were reported in the Platts window totalling 80,000 tonnes of the 380-cst fuel oil with PetroChina eager to lift prompt cargoes, sources said.

PetroChina bought three 20,000 tonne cargoes of the fuel for delivery at the front of the trading window between Nov. 8 and 12 at a premium of $1 a tonne above Singapore quotes each. Koch was the seller of two of those cargoes while Coastal supplied the third.

Prior to today’s deals, PetroChina had bought only three cargoes of the 380-cst fuel oil in the Platts window totalling 60,000 tonnes since at least Aug. 24, data compiled by Reuters showed.

Hin Leong was the supplier of the fourth 380-cst cargo on Monday, selling 20,000 tonnes of the fuel to Coastal at a flat price of $285 a tonne.

The stronger buying interest lifted cash premiums of the 380-cst fuel FO380-SIN-DIF 7 cents higher from Friday to 79 cents a tonne above Singapore quotes on Monday.

CHINA IMPORTS

China’s implied fuel oil demand fell 41 percent from a year earlier, or 19 percent from last month, to 736,000 tonnes in September, according to Reuters calculations using official data.

China’s exports of the industrial fuel rose 35 percent in September compared to last year, but were 8 percent lower from August, at 766,000 tonnes, the data showed.

RELATED NEWS

– Iraq should be exempt from OPEC crude output restrictions as it needs the income to fight the war on Islamic State, Oil Minister Jabar Ali al-Luaibi said on Sunday.

– Saudi Arabia’s Energy Minister Khalid al-Falih said on Sunday he had invited his Russian counterpart Alexander Novak to meet Gulf Arab energy ministers in Riyadh as part of efforts to cooperate with non-OPEC members to stabilise the oil market.

SINGAPORE CASH TRADES: Four cash deals reported. For further details, please see

 FUEL OIL                                                                                 
 CASH ($/T)                 ASIA CLOSE      Change   % Change   Prev       RIC
                                                                Close      
 Cargo - 180cst                     293.26     4.04       1.40     289.22  FO180-SIN
 Diff - 180cst                        1.56    -0.60     -27.78       2.16  FO180-SIN-DIF
 Cargo - 380cst                     285.48     3.93       1.40     281.55  FO380-SIN
 Diff - 380cst                        0.79     0.07       9.72       0.72  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst          287.25     4.75       1.68     282.50  BK380-B-SIN
 Bunker (Ex-wharf) Premium            1.77     0.82      86.32       0.95

Source: Reuters

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