01-11-2016

Asia Fuel Oil-Cash premiums, visco spreads jump on tight cutter supplies

AFO

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: Reuters 

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