28-05-2016

Asia Fuel Oil-380cst spreads slip to 2016 lows as prompt supply weighs

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The Singapore 380cst prompt month time-spreads fell to their lowest this year on Friday as ample immediate supplies continued to weigh on sentiment, traders said.

“The prompt supply situation is still pretty heavy and people are looking for outlets before new cargoes come in,” one Singapore-based trader said.

The prompt month June-July contracts were trading in a contango of $4.25 a tonne on Friday, 25 cents narrower than on Thursday and their lowest since Dec 22.

In markets with ample inventories, the price of a commodity for future delivery tends to be above the price for immediate delivery, a condition known as contango.

In the physical market, four cash deals were reported in the Platts window totalling 80,000 tonnes, industry sources said.

The 380cst fuel oil accounted for three of the traded cargoes, totalling 60,000 tonnes and changing hands at $223 a tonne, equivalent to a discount of about $2.85 a tonne below Singapore quotes. On Thursday cash deals for the same fuel traded at around $3 a tonne below Singapore quotes. FO380-SIN-DIF

Cash differentials of 380cst fuel oil fell 15 cents to $2.73 a tonne below Singapore quotes.

A fourth cargo of 180cst fuel oil, totalling 20,000 tonnes, was sold by Glencore to Shell on Thursday at a discount of $3 a tonne below Singapore quotes.

The last time the lower viscosity fuel oil was traded in the Platts window was on May 13 when Glencore sold two cargoes to Vitol at a discount of $1.50 and $2 a tonne below Singapore quotes.

Cash differentials of 180cst fuel oil fell 39 cents to a discount of $3.30 a tonne to Singapore quotes.

By contrast, the 380cst ex-wharf differentials flipped back into premiums of $1 a tonne to Singapore quotes on Friday. Almost two weeks of heavy selling pressure had depressed the bunker differential into discounts as low as $3 a tonne.

ARA STOCKS:

Fuel oil stocks in the Amsterdam-Rotterdam-Antwerp (ARA) hub fell by 85,000 tonnes in the week to May 26 to a total of 1.187 tonnes, data from Dutch consultancy PJK International showed.

Outgoing cargoes from the hub during the week included one VLCC that departed on May 25. Another VLCC is expected to arrive on May 27 for loading, PJK data showed.

The 7 percent decrease in ARA fuel oil inventories marks the first stock draw in three weeks as arbitrage flows take effect despite a tightly shut arbitrage window, traders said.

RELATED MARKET NEWS:

– Saudi Arabia is offering extra crude to customers in Asia, a sign the world’s largest oil exporter does not intend to cut output as it battles for market share with other top producers.

– Saudi oil giant Aramco is gaining market share and pushing for greater efficiency, chief executive Amin Nasser said in an interview, as it acts as a “bridge” to a future when the nation relies less on energy exports.

– Japan will cut reliance on nuclear power when it releases an updated energy plan as early as next year, reflecting public opposition and a recognition that current policy is unrealistic, three sources familiar with official thinking told Reuters.

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

 FUEL OIL                                                                               
 CASH ($/T)                 ASIA CLOSE      Change   % Change  Prev      RIC
                                                               Close     
 Cargo - 180cst                     226.72    -4.97     -2.15    231.69  FO180-SIN
 Diff - 180cst                       -3.30    -0.39     13.40     -2.91  FO180-SIN-DIF
 Cargo - 380cst                     222.36    -5.24     -2.30    227.60  FO380-SIN
 Diff - 380cst                       -2.73    -0.15      5.81     -2.58  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst          223.36    -2.24     -0.99    225.60  BK380-B-SIN
 Bunker (Ex-wharf) Premium            1.00     3.00   -150.00     -2.00

Source: Reuters

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