Bullish fundamentals in the physical and paper markets helped boost Asia’s fuel oil market complex on Tuesday, boosting 380-cst cash premiums to a near 2017 high while widening premiums across the fuel’s near-term forward curve.
380-cst fuel oil cash premiums FO380-SIN-DIF rose $1.14 a tonne from the previous session to $2.59 a tonne to Singapore quotes, its highest since Jan. 16.
Traders attributed the rising premiums to higher costs of delivered arbitrage cargoes into Singapore, as well as, fewer and less aggressive supplier offers.
Traders pointed to Shell’s sale of 20,000 tonnes of 180-cst fuel oil to Socar at a relatively high premium of $3 a tonne premium to Singapore 180-cst quotes was among the most notable trades on Tuesday.
Mercuria on Tuesday also bought 20,000 tonnes of 180-cst fuel oil from Shell at $304 per tonne, equivalent to a premium of about $2 a tonne to Singapore quotes.
Prior to Tuesday’s trades, the last time 180-cst fuel oil was traded in the window was on April 24 when Vitol sold to Trafigura 40,000 tonnes of the fuel at a premium of about $2.15 a tonne to Singapore quotes.
Five cargo trades were reported in the Platts window totalling 60,000 tonnes of 380-cst fuel oil as well as 40,000 tonnes of 180-cst fuel oil. While still actively bidding for 380-cst cargoes, PetroChina did not buy any fuel oil cargoes in the window for the first time since March 30.
Bullish sentiment was also evident in the swaps market after most near-dated 380-cst fuel oil time spreads, from May/June through to Oct/Nov, posted gains on the Intercontinental Exchange (ICE) by 6 p.m. Singapore time (1000 GMT).
The ICE-traded 380-cst May/June contract posted the largest gains, rising 85 cents a tonne from the previous session to $1.75 a tonne.
The lower viscosity 180-cst May/June contract also rose 85 cents a tonne on ICE, trading at $1.75 a tonne during the same time.
Kuwait’s new al-Zour refinery is expected to produce up to 225,000 barrels per day (bpd) of low-sulphur fuel oil to meet domestic requirements for power generation.
After the start-up of its Clean Fuel project by 2018, which will upgrade its other existing refineries, Kuwait will have to import fuel oil for power generation until the commissioning of the al-Zour refinery in 2019.
NEW PRICE ASSESSMENTS
S&P Global Platts will launch new low-sulphur marine gasoil (MGO) and diesel oil (MDO) prices at several bunkering ports in Asia from June 2017.
This is to cater for rising sales of the fuel sold in Singapore and as sulphur limits are expected to tighten globally in the years ahead, the company said.
ASSESSMENTS FUEL OIL CASH ($/T) ASIA CLOSE Change % Change Prev Close RIC Cargo - 180cst 303.86 0.18 0.06 303.68 FO180-SIN Diff - 180cst 2.03 0.88 76.52 1.15 FO180-SIN-DIF Cargo - 380cst 296.49 0.04 0.01 296.45 FO380-SIN Diff - 380cst 2.59 1.14 78.62 1.45 FO380-SIN-DIF Bunker (Ex-wharf)- 380cst 299.00 0.00 0.00 299.00 BK380-B-SIN Bunker (Ex-wharf) Premium 2.51 -0.04 -1.57 2.55
Source: ReutersPrevious Next
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