Asia Fuel Oil-380-cst premiums sink to 2-week low, time spreads pare earlier gains


Lower deal values in the Platts window on Monday saw cash premiums of 380-cst fuel oil fall to their lowest in May, while near-dated 380-cst time spreads on the Intercontinental Exchange (ICE) gave back gains made in the previous week in low traded volumes.

The ICE-traded 380-cst June/July spreads contract fell by 45 cents a tonne from the previous session to 5 cents a tonne, after trading about 260,000 tonnes in contracts by 5:00 p.m. Singapore time (0900 GMT) on Monday.

Industry sources said the spreads contract lost as much as 40 cents a tonne earlier in the day before physical trade in the Platts window began amid relatively low volumes of less than 100,000 tonnes in contracts.

Given firm demand for 380-cst fuel oil cargoes and expectations of narrower supplies from around June, sources said they expected time spreads to recover from Monday’s losses.

Open Interest (OI) levels for the ICE 380-cst June contract rose to just over 10.5 million tonnes, the highest OI level for any month this year.

Previously, the 380-cst March contract held the highest OI levels for the year at just under 10 million tonne.

Eight cargo trades were reported in the Platts window on Monday totalling 100,000 tonnes of 380-cst fuel oil through five cargoes, along with three 20,000 tonne cargoes of 180-cst fuel oil.

While volumes in the window remain elevated, Monday’s deal values were lower compared with the previous session.

Monday’s deals were concluded at a premium range between 76 cents and $1.35 a tonne to Singapore quotes, down from Friday’s deal premiums between $1.3 and $2 a tonne.

A total of 1.16 million tonnes of fuel oil have traded in the window since the start of May, compared to 3.821 million tonnes in April.

Koch has fixed a VLCC, the MT Artois, to load up to 270,000 tonnes of fuel oil in Rotterdam on May 31 for delivery into Singapore by July 9, industry sources said.

Russian oil producer Surgutneftegaz has awarded Trafigura with up to 3.7 million tonnes of fuel oil via tenders, produced at Kirishi refinery, for delivery from the Baltic Sea port of Ust-Luga in July-December 2017, industry sources told Reuters on Monday.

The UAE’s ADNOC is offering up to 425,000 tonnes of straight-run fuel oil (SRFO) through five 85,000 tonne cargoes for delivery on July 2-4, July 7-9, July 13-15, July 19-21 and July 25-27 from Ruwais. The tender closes on May 16.

It was unclear why ADNOC was offering five cargoes of SRFO in July, which is higher than the usual 3-4 cargoes it has been offering since the start of the year after a fire at its Ruwais refinery damaged a secondary processing unit.

Global oil inventories in floating storage have declined by one-third since the start of the year, a source from the Organization of the Petroleum Exporting Countries told Reuters on Monday.

 FUEL OIL                                                                                 
 CASH ($/T)                 ASIA CLOSE      Change   % Change   Prev       RIC
 Cargo - 180cst                     308.04     4.48       1.48     303.56  FO180-SIN
 Diff - 180cst                        2.42    -0.83     -25.54       3.25  FO180-SIN-DIF
 Cargo - 380cst                     299.19     5.33       1.81     293.86  FO380-SIN
 Diff - 380cst                        1.48    -0.23     -13.45       1.71  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst          303.00     5.25       1.76     297.75  BK380-B-SIN
 Bunker (Ex-wharf) Premium            3.81    -0.08      -2.06       3.89

Source: Reuters

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