24-02-2017

Asia Fuel Oil-Spreads rebound despite jump in Singapore inventories

Asiafuelo

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: Reuters

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