31-05-2016

Asia Fuel Oil-380cst spreads edge higher from 2016 lows amid muted trading

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Singapore 380cst prompt month time-spreads recovered on Monday from 2016 lows seen on Friday though trading was muted, traders said.

The prompt month June-July contracts were trading on the Intercontinental Exchange (ICE) in a contango of around $3.75 a tonne on Monday, slightly narrower from Friday’s settlement of around $4 a tonne to Singapore quotes, industry sources said.

While no cash deals were reported in the physical markets, cash differentials for 380cst fuel oil also narrowed their discounts to $2.55 a tonne to Singapore quotes as a result of marginally higher bidding in the Platts window, industry sources said.

Meanwhile, aggressive selling in the marine fuels market, or bunkers, sent 380cst ex-wharf differentials back into discounts of around minus $1.50 a tonne to Singapore quotes, industry sources said, the second time in two weeks that premiums have flipped back into discounts. On May 17, heavy selling depressed the bunker differential into discounts as low as $3 a tonne to Singapore quotes.

Somewhat surprisingly, global demand for fuel oil was very high in Jan-Apr, growing by 230,000 barrels per day from the same time last year, with significant year-on-year increases observed in the United States, Mexico, Europe, Russia, the Middle East, South Korea, and Singapore, JBC Energy said in its daily note to clients on Monday.

“Some of these can be attributed to power generation demand (e.g. Russia and Mexico), while in other countries, the upticks appear to be concentrated in the bunkering sector,” JBC said.

Growth in the marine fuels segment is a result of robust port traffic as well as increased sales of ultra low-sulphur fuel oil for Emission Control Areas (ECA) compliance, which is priced at a significant discount to marine gas oil and whose quality and availability has improved in recent months, the independent researcher said.

RELATED MARKET NEWS:

– Embattled commodity trader Noble Group announced the surprise resignation of CEO Yusuf Alireza on Monday and said it planned to sell a U.S. unit to bolster its balance sheet as it seeks to regain investor confidence.

– Iraq will supply 5 million barrels of extra crude to its partners in June, industry sources familiar with the issue said, joining other Middle East producers by lifting market share ahead of an OPEC meeting this week.

– A group of Chinese companies plans to build new pipeline and storage facilities in eastern Shandong province, the hub for independent refineries, providing much-needed\infrastructure as crude oil imports into the region surge.

SINGAPORE CASH DEALS – No cash deal reported. For further details, please see

 FUEL OIL                                                                                 
 CASH ($/T)                  ASIA CLOSE       Change   % Change  Prev      RIC
                                                                 Close     
 Cargo - 180cst                       229.21     2.49      1.10    226.72  FO180-SIN
 Diff - 180cst                         -2.84     0.46    -13.94     -3.30  FO180-SIN-DIF
 Cargo - 380cst                       224.25     1.89      0.85    222.36  FO380-SIN
 Diff - 380cst                         -2.55     0.18     -6.59     -2.73  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst            222.75    -0.61     -0.27    223.36  BK380-B-SIN
 Bunker (Ex-wharf) Premium             -1.50    -2.50   -250.00      1.00

Source: Reuters 

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