Asia Fuel Oil-Cracks boosted by expectations of tighter prompt supplies

Asia’s fuel oil crack rose to multi week highs on Monday, boosted by expectations of tighter supplies by the end of the year partly because of limited arbitrage bookings and lower output from key producers, including Russia and Venezuela, trade sources said.

In addition to higher freight rates making arbitrage flows into Asia less profitable, some of the sources pointed to the reluctance of suppliers to import more cargoes as the current fiscal year draws to an end. Softer crude oil prices also helped lift fuel oil cracks.

The November 180-cst fuel oil crack to Dubai crude narrowed to minus $1.91 a barrel, its narrowest discount since Sept. 21. – Similarly, the November 180-cst discount to Brent crude narrowed by 26 cents a barrel from Friday to minus $3.90 a barrel on Monday, its narrowest discount since Sept. 25.

Russian refinery runs were 5 percent down in September from the previous month and down 0.9 percent from the same time last year, official data showed.

Russian fuel oil output stood at 3.519 million tonnes in September, down 8.3 percent from August and 17.7 percent lower from September 2016, based on absolute figures, the data showed.

One cargo trade was reported in the Platts window totalling 20,000 tonnes of 180-cst fuel oil.

Gunvor sold the 180-cst cargo to Vitol for prompt delivery on Nov. 7-11 at a premium of $1.25 a tonne to Singapore quotes. – The last time 180-cst fuel oil was traded in the window was on Oct. 12 when Vitol bought a similar cargo from Reliance at $333.65 a tonne, or the equivalent of about 5 cents a tonne above Singapore quotes. – Please click on for more details.

The UAE’s Adnoc has sold five 85,000-90,000-tonne cargoes of straight-run fuel oil for loading over November at premiums of about $23-$25 a tonne to Singapore 180-cst quotes, trade sources said.

The cargoes were awarded to Lukoil, PetroChina, Mercuria, GS Caltex and SK Energy, however the specific loading dates most companies were allocated could not be confirmed.

Buyers are to take delivery of the cargoes from Adnoc’s refinery in Ruwais on Nov. 1-3, 8-10, 14-16, 20-22 and 25-27. – Lukoil has chartered the Stavanger Bliss aframax vessel to load fuel oil on Nov. 1-3 from Ruwais for discharge at an unspecified destination in Asia, according to one tanker report.

Bahrain’s Bapco sold 60,000-80,000 tonnes of 380-cst fuel oil with a maximum 4 percent sulphur content to Aramco Trading (ATC) for Nov. 20-23 loading from Sitra at an unknown price level, sources said.

Struggling commodities trader Noble Group agreed to sell its Americas-focused oil liquids business to Vitol for about $580 million as part of a debt-cutting strategy, and warned of a big loss for its third quarter.

Source: Reuters

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