Asia Fuel Oil-Arbitrage spreads slip despite ARA inventory build

The November East-West arbitrage slipped to a near two-week low at the Asia close on Friday despite data showing fuel oil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) oil hub rose to a three week high over the past week, industry sources said. Despite the drop in the arbitrage spread, two industry sources said the locking in new shipments was still workable for November arrival into Singapore. The November arbitrage spread on Friday settled in Asia at $22.75 a tonne, 25 cents a tonne lower from the previous session.

Fuel oil stocks in the Amsterdam-Rotterdam-Antwerp (ARA) oil hub rose 17 percent, or 187,000 tonnes, to 1.290 million tonnes in the week to Sept. 28, PJK data showed. – The rise in inventories were a result of high imports, particularly from the Baltics, and limited exports to main destination Singapore, PJK analyst Jacob van den Berge said.

Compared to the same time last year, ARA fuel oil inventories are up 66 percent.

The rise in weekly inventories snapped two consecutive weeks of inventory declines. – Fuel oil shipments from ARA included just one part cargo to Singapore over the past week, PJK data showed.

This week, official data showed Singapore fuel oil inventories fell 5.5 percent to a total of 3.47 million tonnes in the week to Sept. 27, while inventories of the fuel in Fujairah Oil Industry Zone (FOIZ) were 8 percent higher in the week to Sept. 25 to a total of 1.74 million tonnes.

Four cargo trades were reported in the Platts window, totalling 80,000 tonnes of 380-cst fuel oil.

Coastal, Mercuria and PetroChina each sold one 20,000 tonne cargo to Hin Leong at the floating price equivalent of about $2 a tonne and $2.55 a tonne above Singapore quotes, sources said.

Coastal bought a fourth cargo from Mercuria at a premium equivalent of about $2.25 a tonne to Singapore quotes.

A total of 2.262 million tonnes of fuel oil have traded in the window in September, against 1.402 million tonnes in August.

Trafigura was the biggest buyer of fuel oil cargoes by volume this month with 1.031 million tonnes purchased in the window, followed by Hin Leong with 540,000 tonnes and Mercuria with 240,000 tonnes.

Mercuria was the largest supplier by volume in September with 1.002 million tonnes, followed by PetroChina with 460,000 tonnes and Gunvor with 260,000 tonnes.

Source: Reuters

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