07-07-2017

Asia Fuel Oil-Demand lifts 180-cst premiums, arbitrage spread rises

FUEL

Firm demand for 180-cst cargoes on Thursday lifted cash premiums of the benchmark fuel oil. By contrast, premiums of the mainstay 380-cst fuel oil slipped for a third consecutive session to a near 1-month low amid weak buying interest.

Meanwhile, weaker fuel oil price levels in northwest Europe and narrowing inventories in Singapore have helped raise the East-West arbitrage spread to a three session high.

WINDOW TRADES
Six cargo trades were reported in the Platts window, including four 20,000 tonne cargoes of 180-cst fuel and two 380-cst fuel oil trades totalling 60,000 tonnes.

PetroChina bought all four 180-cst cargoes, three from Total and another from Shell.
The last time as many 180-cst cargoes were traded in the window was on May 17 when Mercuria bought 80,000 tonnes of the fuel from Trafigura, Shell and BP.

Mercuria supplied both of Thursday’s 380-cst trades including one 40,000 tonne cargo to Total and another 20,000 parcel to Vitol.

SINGAPORE INVENTORIES
Singapore onshore fuel oil inventories fell 3.5 percent, or 114,000 tonnes, to a total of 3.2 million tonnes in the week to July 5, official data showed.
This came as net imports fell 14 percent to a 2-week low of 1.05 million tonnes.

Net exports of Singapore fuel oil to neighbouring Malaysia were at a 12-month high of 119,000 tonnes.
Singapore is typically a net importer of fuel oil from Malaysia as volumes of the fuel are moved from floating storage vessels there into the city-state.

Singapore imported just 66,000 tonnes of fuel oil from Malaysia in the week to July 5 compared with a weekly average of 307,000 tonnes this year.

ARB SPREADS
The August 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 to $19.50 a tonne on Thursday, up 25 cents a tonne from the previous session.

The Rotterdam barge time spreads for July/Aug were at a premium of $1.90 a tonne on Thursday, down 60 cents a tonne from the previous session and down from a near 1-year high of $4 a tonne on Friday.

Source: Reuters

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