Asia Fuel Oil-Contango structure widens as abundant supplies weigh


Front-month time spreads of Asian 380cst fuel oil widened their contango structure on Wednesday as participants factored in Singapore’s
brimming inventories of the fuel, traders said.

“There’s a serious ullage issue,” said one Singapore-based trader. “We’ve been hearing most of onshore inventories for fuel oil are still pretty much full.”

Ullage is the unfilled space in tanks and floaters, or vessels that have been chartered for the purpose of storing oil at sea due to a lack of onshore tanks.

Last week, official data showed onshore stocks of Singapore fuel oil had jumped 19.4 percent from a week earlier to an all-time high of 31.002 million barrels STKRS-SIN.

Both the June-July and Aug-Sept spreads contracts for 380cst fuel oil widened their contango structures amid heavy trading activity on the Intercontinental Exchange (ICE), industry sources said.

“Even before the window opened, June-July traded 140,000 tonnes and Aug-Sept traded 275,000 tonnes and were both down 35 cents from Tuesday’s settlement and pretty much stayed there,” said another Singapore trader.

Reuters data shows the contango structure of the June-July spreads for 380cst fuel oil widened to $3.75 a tonne below Singapore quotes on Wednesday, its lowest since late February, while the Aug-Sept contango fell to minus $2.75 a tonne.

Meanwhile, 380cst ex-wharf differentials continued to narrow its discounts to minus $1 a tonne to Singapore quotes, up 25 cents from Tuesday. Last week, ex-wharf premiums suddenly flipped into deep discounts as low as minus $3 a tonne amid considerable selling pressure as suppliers sought to offload inventories.

– China’s commercial crude oil stocks at the end of April fell 3.7 percent from the previous month and refined fuel stocks eased 2.45 percent on month, the official Xinhua News Agency reported on Tuesday.

– China may open up its commodities futures markets to overseas and financial investors, the country’s securities regulator said, as the world’s top consumer of many raw materials seeks to play a larger role in setting global commodities prices.

– CEFC China Energy, a group with interests spanning oil, finance and travel, has agreed to lease out tanks at its new facility in the southern island province of Hainan to state-owned ChemChina to help build the country’s strategic reserves.

– South Korea’s crude oil imports from Iran rose 88 percent in April from a year earlier, while its total crude oil imports rose 14 percent year on year to 89.7 million barrels last month, data from state-run Korea National Oil Corp (KNOC) showed on Tuesday.

SINGAPORE CASH DEALS – One cash deals reported. For further details, please see

 FUEL OIL                                                                                 
 CASH ($/T)                 ASIA CLOSE       Change   % Change  Prev      RIC
 Cargo - 180cst                      229.92     5.18      2.30    224.74  FO180-SIN
 Diff - 180cst                        -2.78    -0.26     10.32     -2.52  FO180-SIN-DIF
 Cargo - 380cst                      225.38     5.50      2.50    219.88  FO380-SIN
 Diff - 380cst                        -3.05     0.12     -3.79     -3.17  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst           224.38     6.00      2.75    218.38  BK380-B-SIN
 Bunker (Ex-wharf) Premium            -1.00     0.50    -33.33     -1.50

Source: Reuters 

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