24-03-2017

Asia Fuel Oil-Spreads, cash diffs edge higher as traders anticipate turn in trend

fuel

Sentiment in Asia’s fuel oil market was showing signs of improvement on Thursday on expectations that relatively fewer arbitrage supplies in April could ease burgeoning inventories in the near term, traders said. “Sentiment is slowly turning around … inventories are clearing and crude (oil prices) are forming a bottom,” said a Singapore-based fuel oil trader.

In a sign of lower supply replenishment, Singapore onshore fuel oil inventories edged up by 0.5 percent, or 21,000 tonnes, to a total of 4.04 million tonnes in the week to March 22, the latest official data showed.

Singapore’s landed inventories of residual fuels were virtually unchanged after lower imports and higher exports squeezed net imports to a 14-week low of 451,000 tonnes in the week to March 22, down 50 percent from the previous week, data compiled by Reuters showed. Traders estimated total April arbitrage arrivals into Singapore at about 4 million to 5 million tonnes. This compared to total monthly arrivals of more than 7 million tonnes in the first quarter of the year, assessments by Thomson Reuters Oil Research showed.

Cash discounts and near-dated time spreads of the 380-cst fuel were both lifted by stronger buying interest, traders said. Seven cargoes were traded in the Platts window on Thursday totalling 160,000 tonnes of the 380-cst fuel, sources said. For the second time this month, Mercuria was the lead buyer of 380-cst cargoes taking four, followed by PetroChina with three and BP with one.

Gunvor and Lukoil each supplied three of those cargoes while Shell provided the seventh loading. Since the start of the month, more than 2.5 million tonnes of fuel oil has traded in the Platts window, of which PetroChina has bought more than half at around 1.4 million tonnes, sources said.

 FUEL OIL                                                                                  
 CASH ($/T)                 ASIA CLOSE       Change   % Change   Prev       RIC
                                                                 Close      
 Cargo - 180cst                      288.16     0.06       0.02     288.10  FO180-SIN
 Diff - 180cst                        -1.57     0.05      -3.09      -1.62  FO180-SIN-DIF
 Cargo - 380cst                      282.33     0.48       0.17     281.85  FO380-SIN
 Diff - 380cst                        -0.66     0.70     -51.47      -1.36  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst           284.25     0.25       0.09     284.00  BK380-B-SIN
 Bunker (Ex-wharf) Premium             1.92    -0.23     -10.70       2.15

Source: Reuters

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