09-11-2017

Asia Fuel Oil-Arbitrage window narrows amid steady inflows

The East-West (EW) arbitrage spread of 380-cst fuel oil narrowed on Wednesday amid no shortage of fuel oil inflows into Singapore as well as weaker fuel oil prices in the city-state relative to Rotterdam prices, industry sources said.

ARBITRAGE

– The December 380-cst EW arbitrage spread narrowed to about $19.75 a barrel on Wednesday, down from about $20.25 a barrel in the previous session, broker sources said.

– Despite the narrower spread, sources said arbitrage opportunities between northwest Europe and Singapore remain ‘workable’, but is unlikely to attract many large fixtures amid ample near-term inventories and as the year draws to an end.

– Total fuel oil flows into East Asia for November are expected to close at around month-average levels for the first time in two months, notionally assessed at 6.3-6.4 million tonnes for the month, assessments by Thomson Reuters Oil Research showed.

– The arbitrage flows are boosted by recovering Western arrivals, near record-high inflows from the Middle East and 11-month high intra-Asia volumes, the assessment said.

INVENTORIES

– Fujairah Oil Industry Zone (FOIZ) fuel oil inventories fell 743,000 barrels (or about 111,000 tonnes) to 8.641 million barrels (1.29 million tonnes) in the week to Nov. 6, data via S&P Global Platts showed.

– Snapping three straight weeks of inventory builds, Fujairah fuel oil inventories are now at a four-week low.

– Weekly Fujairah fuel oil inventories averaged 10.4 million barrels (or 1.55 million tonnes) since records began at the start of the year.

WINDOW TRADES

– Four cargo trades were reported in the Platts window, totalling 40,000 tonnes of 180-cst fuel oil and 40,000 tonnes of 380-cst fuel oil. – Please click on for more details.

TENDERS

– Pakistan’s PSO is seeking to import up to 565,000 tonnes of fuel oil for delivery in January, sources said. The tender seeks up to import up to seven 65,000 tonne cargoes of high-sulphur fuel oil (HSFO) into port Qasim on an FOB basis in January and up to two 55,000-tonne cargoes of low-sulphur fuel oil (LSFO) into Karachi on a CFR basis between Dec. 25 and Jan. 31. PSO’s import tender closes, and is valid until, Dec. 6.

– PSO recently concluded its import requirements for December, lifting only three of the nine cargoes it initially sought.

LNG BUNKER FUELS

– Container shipping giant CMA CGM said on Tuesday it would use liquefied natural gas to power nine extra-large vessels it has ordered, in a first for an industry grappling with how to comply with tougher rules on emissions.

– Shell Trading (US) Company announced late on Tuesday it has finalised a long-term charter agreement with Q-LNG Transport LLC for an LNG bunker barge with a capacity to carry 4,000 cubic meters of LNG fuel.

– The ocean-going LNG bunker barge, the first of its kind to be based in the U.S., will supply LNG to marine customers along the southern East Coast of the U.S. and support growing cruise line demand for LNG marine fuel, it said in a statement.

ASSESSMENTS FUEL OIL CASH ($/T) ASIA CLOSE Change % Change Prev Close RIC

Cargo – 180cst 372.61 -8.66 -2.27 381.27 Diff – 180cst -0.18 0.02 -10.00 -0.20

Cargo – 380cst 369.95 -9.30 -2.45 379.25 Diff – 380cst 1.21 -0.38 -23.90 1.59

Bunker (Ex-wharf)- 380cst 372.50 -9.25 -2.42 381.75

Bunker (Ex-wharf) Premium 2.55 0.05 2.00 2.50

Source: Reuters

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