04-06-2016

Asia Fuel Oil-380-cst contango around 2016 lows on brimming tanks

asiafuel

The contango price structure of the prompt front-month time spreads of Asian 380-cst fuel oil held steady around their 2016 lows on Friday as Singapore’s brimming inventories kept discounts wide, traders said.

The June-July spreads contracts for 380-cst fuel oil stood at minus $4 a tonne to Singapore quotes, only 25 cents higher from their 2016 lows recorded yesterday.

On the Intercontinental Exchange (ICE), however, the same spreads contract was trading slightly lower at minus $4.25 a tonne, industry sources said.

In a market 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.

On Thursday, official data showed onshore stocks of Singapore fuel oil had jumped 7.7 percent from a week earlier to a new record high of 31.18 million barrels.

In Russia, the world’s largest producer of fuel oil, output continued to fall amid poor yields and firm domestic demand.

“Not surprisingly, April Russian fuel oil output fell from last year by a massive 0.48 mb/d to below 1 million barrels per day (mb/d) for the first time since 2002 as yields plummeted to just 17.8 percent,” said energy aspects in it’s Russia data review report released on Thursday.

As a result, April exports were lower by 0.34 mb/d from the same time last year at 0.67 mb/d, said the research consultancy.

TENDERS:
– The Indian Oil Corporation (IOC) awarded a 35,000 tonne cargo of 380-cst fuel oil to Gulf Petrochem at an estimated cost of $11 to $13 a tonne below Singapore quotes, industry sources said.

The cargo is due for delivery between June 13 to 15.

– India’s Hindustan Petroleum Corporation Limited (HPCL) awarded a 30,000 tonne cargo of 180-cst fuel oil to Vitol for delivery between May 28 and June 5 at an unknown cost, industry sources said.

MARKET NEWS:
– Glencore Plc is expanding its oil trading business in eastern Australia, with plans to soon start bunker fuel supply operations at the Port of Brisbane, adding to operations it launched at ports in New South Wales in April.

– India’s Mangalore Refinery and Petrochemicals Ltd MRPL.NS aims to operate its 300,000 barrels per day (bpd) refinery at full capacity by mid-June, its head of refineries M Venkatesh said on Friday.

– OPEC failed to agree a clear oil-output strategy on Thursday as Iran insisted on steeply raising its own production, though Tehran’s arch-rival Saudi Arabia promised not to flood the market and sought to mend fences within the organisation.

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

 FUEL OIL                                                                                 
 CASH ($/T)                 ASIA CLOSE        Change   % Change  Prev      RIC
                                                                 Close     
 Cargo - 180cst                       233.49     2.38      1.03    231.11  FO180-SIN
 Diff - 180cst                         -3.85    -0.21      5.77     -3.64  FO180-SIN-DIF
 Cargo - 380cst                       228.02     2.10      0.93    225.92  FO380-SIN
 Diff - 380cst                         -4.23    -0.23      5.75     -4.00  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst            227.02     2.10      0.93    224.92  BK380-B-SIN
 Bunker (Ex-wharf) Premium             -1.00     0.00      0.00     -1.00

Source: Reuters 

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