Asia’s near-dated time spreads for 380-cst fuel oil regained losses from the previous session, ignoring a substantial build in onshore Singapore inventories and drifting away from near-term fundamentals, traders said on Thursday.
Singapore inventories of residual fuels rose 11 percent, or 386,000 tonne, to a seven-month high of 3.98 million tonnes in the week to Feb. 22, official data released on Thursday showed.
“Spread bulls took over from the bears today,” one Singapore-based trader said.
The inventory increase followed a 47 percent drop in total exports from Singapore O-SGEXP-FO from the previous week to 455,000 tonnes, a three-week low.
“That’s the build that some of the traders don’t want to see … but guess what the market is doing now? Going up,” a second Singapore trader said.
Premiums of the Intercontinental Exchange-traded traded 380-cst fuel oil March/April time spreads were about 35 cents a tonne higher from Wednesday’s close at around $2.10 a tonne by 1730 Singapore time (0930 GMT).
Premiums for the 380-cst April/May contract also rose, up 20 cents a tonne from the previous session to plus 70 cents.
Traders said it was difficult to attribute any supply-demand fundamentals to the near-term backwardated market structure for 380-cst fuel.
“Supplies are even higher now and demand is a bit slow,” another trader said.
Most traders associated the strength in time spreads to an expected trading play that could result in soaring trade volumes.
FUEL OIL CASH ($/T) ASIA CLOSE Change % Change Prev RIC Close Cargo - 180cst 323.22 1.78 0.55 321.44 FO180-SIN Diff - 180cst -0.15 0.13 -46.43 -0.28 FO180-SIN-DIF Cargo - 380cst 317.09 1.73 0.55 315.36 FO380-SIN Diff - 380cst -1.24 0.29 -18.95 -1.53 FO380-SIN-DIF Bunker (Ex-wharf)- 380cst 318.25 1.25 0.39 317.00 BK380-B-SIN Bunker (Ex-wharf) Premium 1.16 -0.48 -29.27 1.64
Source: ReutersPrevious Next