11-03-2016

Asia Fuel Oil-Time spreads jump on strong bidding, inventories rise

Fuel

The time spreads for 380cst Asia fuel oil strengthened significantly on Thursday thanks to sustained buying interest, traders said.

The bullish sentiment lifted prompt front-month time spreads to their highest since June 2015, when a trading play saw front-month time spread premiums to Singapore quotes surge.

Time spreads for the balance of March-April 380cst fuel rose by $1.25 to a premium of $1.75 per tonne to Singapore quotes.

“More interestingly, the April-May time spreads saw more than 1 million tonnes of volume being traded today,” said a Singapore-based trader.

Heavy trading in the swaps market saw discounts of the April-May time spreads narrow to an average of minus $1.75 per tonne to Singapore quotes with about 400,000 tonnes being traded within an hour, said a second Singapore trader.

On Wednesday, the April-May time spreads traded at an average discount of $3.39 per tonne to Singapore quotes, said the second trader.

Despite the continued bullish sentiment, some traders reiterated that near-term market fundamentals were weakening as indicated by the growing inventories of Singapore fuel oil.

Official data showed onshore inventories of Singapore residual fuel oil rose for a seventh consecutive week to the highest on records going back to October 2011.

Residual fuel oil inventories increased by 1.34 million barrels, or 4.6 percent, for the week to March 9 to 30.57 million barrels, the data showed.

REFINING

Japan’s Showa Shell Sekiyu group refiner Seibu Oil Co. shut a 28,000 barrel-per-day (bpd) fluid catalytic cracking (FCC) unit at its Yamaguchi refinery on Monday due to a problem, Showa Shell said.

The operations of the sole 120,000 bpd crude distillation unit (CDU) at the western Japan-based refinery have been adjusted as a result, a spokesman for Showa Shell said, adding that there was no timeline yet for restarting the FCC.

In Europe, refineries processed less crude in February that the previous month and a year earlier, data from industry monitor Euroilstock showed, as margins slipped.

Nevertheless, fuel oil inventories rose in February almost 4.4 percent from January to 79.4 million barrels and are 5.9 percent higher from the same time last year, the data showed.

SINGAPORE CASH DEALS – 13 deals reported. For details, please see

 FUEL OIL                                                                                            
 CASH ($/T)                 ASIA CLOSE         Change     % Change     Prev Close   RIC
 Cargo - 180cst                        186.23      10.52         5.99       175.71  FO180-SIN
 Diff - 180cst                          -1.00       0.56       -35.90        -1.56  FO180-SIN-DIF
 Cargo - 380cst                        184.46      10.15         5.82       174.31  FO380-SIN
 Diff - 380cst                           0.30       0.24       400.00         0.06  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst             183.21      10.65         6.17       172.56  BK380-B-SIN
 Bunker (Ex-wharf) Premium              -1.25       0.50       -28.57        -1.75

Source: Reuters 

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