Asia Fuel Oil-Prompt spreads ease after sharp weekly gains


Premiums of the prompt-month 380-cst fuel oil time spread slipped on Friday as traders took stock of sharp gains in the previous two sessions that came amid a surge in trading activity and a decline in onshore inventories.

“Spreads are pulling back after the massive run-up we had,” said a Singapore-based trader.

The 380-cst March/April spreads contract was trading around $2 a tonne on Friday, down from about $3 a tonne in the previous session, broker sources said.

On Wednesday, trading volumes in the prompt month spread soared and its premium jumped, stirring expectations of a bullish trading strategy in the near term.

Bullish sentiment was then supported by a surprise decline in onshore Singapore inventories of fuel oil, which fell 219,000 tonnes to a total of 3.1 million tonnes in the week ended Feb. 15.

However, despite losses on Friday, Reuters data showed the 380-cst prompt month spread contract emerge from a 25 cents-per-tonne contango on Monday, to a backwardation of $2.25 a tonne on Friday.

In the physical markets, no cash deals were reported in the Platts window for the second consecutive session despite more aggressive supplier offers as low as minus $1 per tonne, industry sources said.

By contrast, some of the most competitive supplier offers on Monday for similar cargoes stood at a premium of 25 per tonne, which later in the week grew to a premium of $1 per tonne on Thursday.

Fuel oil stocks in independently held storage in the Amsterdam-Rotterdam-Antwerp (ARA) hub rose to a three-month high of 784,000 tonnes in the week to Thursday, data from Dutch consultancy PJK International showed.

ARA residual fuel inventories STK-FO-ARA were 8 percent higher from the previous week’s total of 721,000 tonnes amid rising Russian exports.

Compared with the same time last year, however, fuel oil inventories in the ARA hub were 30 percent lower.

– Oil traders for the last two weeks have shrugged off reports that U.S. stockpiles are brimming at their largest levels ever recorded, as the market continues to bet that crude prices will climb higher.

CASH DEALS: No trades reported.

 FUEL OIL                                                                                  
 CASH ($/T)                 ASIA CLOSE       Change   % Change   Prev       RIC
 Cargo - 180cst                      322.05    -6.33      -1.93     328.38  FO180-SIN
 Diff - 180cst                        -0.34    -0.77    -179.07       0.43  FO180-SIN-DIF
 Cargo - 380cst                      317.09    -5.86      -1.81     322.95  FO380-SIN
 Diff - 380cst                        -0.69    -1.19    -238.00       0.50  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst           318.50    -4.75      -1.47     323.25  BK380-B-SIN
 Bunker (Ex-wharf) Premium             1.41     1.11     370.00       0.30


Source: Reuters

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