Asia Fuel Oil-Arbitrage spreads slip as cargoes leave ARA for Singapore


The prompt-month East-West (EW) arbitrage spread slipped to its lowest in nearly two weeks after suppliers locked in replenishment supplies from northwest Europe to meet firm demand for the industrial fuel sustained over the past two months in the Singapore Platts window.

– Fuel oil stocks at independently held storage in the Amsterdam-Rotterdam-Antwerp (ARA) hub STK-FO-ARA sank by 25 percent to a three-month low in the past week as exports rose, according to Dutch consultancy PJK International.

– Inventories fell to 785,000 tonnes, their lowest since Feb. 16, as three tankers departed from the hub to Singapore and West Africa, PJK’s Patrick Kulsen said.

– Traders said that strong demand in Singapore had recently forced the East-West arbitrage window open after more than two months of elevated trade activity in the Platts window saw large volumes of the fuel exchange hands, pushing up prices of Singapore fuel oil higher relative to Northwest European levels.

– The May EW spread between FOB Singapore 180-cst high-sulphur fuel oil and FOB Rotterdam barge fuel oil with maximum 3.5 percent sulphur slipped to its lowest since May 2 at $27 a tonne, down 25 cents from the previous session.

– Since the start of March, a total of 7.9 million tonnes of fuel oil has traded in the Singapore window.

– Petroineos, a joint venture between PetroChina and British petrochemicals company Ineos Group, has provisionally chartered a VLCC, the Sophia, to load up to 280,000 tonnes of fuel oil in Rotterdam on May 28 for delivery into Singapore by July 6.

– Six cargo trades were reported in the Platts window on Friday for a total of 100,000 tonnes of 380-cst fuel oil and 20,000 tonnes of 180-cst fuel.
– 380-cst cash premiums FO380-SIN-DIF slipped to a two-week low, dragged down by weaker deal values on Friday.
– 380-cst trades on Friday were concluded at a premium range between $1.30 and $2 a tonne to Singapore quotes, down from premiums of $2-$3 a tonne on Thursday.
– A total of 1 million tonnes of high-sulphur fuel oil have traded in the window since the start of May.

Source: Reuters

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