Cash differentials and the front month visco spread of Asia’s benchmark 180-cst and 380-cst fuel oil jumped to multi-month highs on Monday as tight supplies of cutter stock continued to weigh on the market, traders said.
“A lot of off-spec cargoes came in, hence the visco (spread) that’s through the roof,” said a Singapore-based trader.
Cutter stocks are blended with heavy fuel oils in order to reduce their viscosity, among others, to meet end-user specifications.
“Cutter stocks have already been a bit tight for about a month now but the abundance of heavy (fuel) oil is becoming more noticeable,” said another Singapore-based trader.
The cash premium for the 180-cst fuel FO180-SIN-DIF widened 56 cents on Monday to $2.59 a tonne to Singapore quotes, its highest since June 6 when it settled at $3.50 a tonne.
Similarly, the premium for the 380-cst fuel FO380-SIN-DIF was 33 cents higher from the previous session at $1.41 a tonne above Singapore quotes. The last time 380-cst premiums were higher was on March 28 at $2.27 a tonne as the so-called March bull play, which saw fuel oil prices rise to multi-month highs, drew to an end.
In paper markets, the November visco spread rose to its highest level in more than a year to $8 a tonne. The last time the front-month visco spread was higher was on Oct. 8 last year, when it reached $8.25 a tonne.
The front-month time spreads were also elevated in response to the lack of on-spec cargoes, traders said.
The Nov/Dec time spread for 180-cst fuel oil rose 75 cents on Monday to a seven-week high of $1.75 a tonne to Singapore quotes.
The Nov/Dec spread for 380-cst fuel was at a five week high of $1.25 a tonne above Singapore quotes after rising 50 cents from the previous session.
SINGAPORE CASH TRADES: Two cash deals reported. For further details, please see
FUEL OIL CASH ($/T) ASIA CLOSE Change % Change Prev RIC Close Cargo - 180cst 285.86 -0.52 -0.18 286.38 FO180-SIN Diff - 180cst 2.59 0.56 27.59 2.03 FO180-SIN-DIF Cargo - 380cst 276.61 -1.36 -0.49 277.97 FO380-SIN Diff - 380cst 1.41 0.33 30.56 1.08 FO380-SIN-DIF Bunker (Ex-wharf)- 380cst 279.00 -1.00 -0.36 280.00 BK380-B-SIN Bunker (Ex-wharf) Premium 2.39 0.36 17.73 2.03
Source: ReutersPrevious Next
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