Asia Fuel Oil-Arbitrage window widens on jump in ARA stocks


The April East-West (EW) spread rose to a near two-week high on Friday, lifted by a sharp increase in fuel oil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) storage hub, but traders said arbitrage opportunities were limited by ample supplies in Singapore.

Fuel oil inventories independently held in storage in the ARA region jumped 43 percent in the week to March 9 as imports arrived from Russia and Latvia and not a single VLCC loaded to sail to Asia, data from Dutch consultancy PJK International showed.

Fuel oil inventories STK-FO-ARA gained 354,000 tonnes in the week, rising to a near four-month high of 1.17 million tonnes.

Compared with the same time last year, fuel oil inventories in the ARA hub were 1 percent higher.

This came after official data on Thursday showed Singapore onshore fuel oil inventories rose by 5 percent in the week ended March 8 to a nearly eight-month high of 4.14 mln tonnes.

The April EW spread – the price difference between FOB Singapore 180-cst high-sulphur fuel oil and FOB Rotterdam barge fuel oil with maximum 3.5 percent sulphur – rose by 50 cents from the previous session to $23 a tonne, its highest since Feb. 28.

Ample prompt supplies in Singapore have weighed on Asia’s price benchmarks since the start of the month, helping to stifle an anticipated bull trading play this month.

Still, renewed buying interest on Friday boosted cash differentials of the 380-cst fuel oil, narrowing its discount to a one-week low of minus 36 cents a tonne to Singapore quotes, up from minus $1.35 a tonne in the previous session.

PetroChina bought three cargoes of 380-cst fuel on the Platts window totalling 60,000 tonnes from Koch, Shell and Glencore.

Mercuria also bought one 20,000 tonne cargo of 180-cst fuel from BP.

Since the start of the month, PetroChina has bought a total of 560,000 tonnes of 380-cst fuel oil in the window, data compiled by Reuters showed.

 FUEL OIL                                                                                  
 CASH ($/T)                 ASIA CLOSE       Change   % Change   Prev       RIC
 Cargo - 180cst                      301.74    -9.79      -3.14     311.53  FO180-SIN
 Diff - 180cst                        -0.59     0.36     -37.89      -0.95  FO180-SIN-DIF
 Cargo - 380cst                      296.01    -8.93      -2.93     304.94  FO380-SIN
 Diff - 380cst                        -0.36     0.99     -73.33      -1.35  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst           297.50    -9.00      -2.94     306.50  BK380-B-SIN
 Bunker (Ex-wharf) Premium             1.49    -0.07      -4.49       1.56

Source: Reuters 

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