08-06-2016

Asia Fuel Oil-Spreads weak as stocks outweigh impact of crude price jump

AsiaFuelO

Spreads for Asian fuel oil were close to a 2016 low for a second day on Tuesday as plentiful fuel oil stocks outweighed dwindling crude oil supplies and stronger crude prices, traders said.

“Spreads for 180 and 380-centistoke fuel oil are at around a discount of $4 per tonne, showing there’s still plentiful supplies,” a Singapore-based trader said. “But crude is looking firm,” the trader said. Spreads for 180-cst held at minus $3.75 a tonne and minus $4 per tonne for 380-cst on the Intercontinental Exchange (ICE).

“The market hasn’t showed any change in the fundamentals,” a second Singapore-based fuel oil trader said. The market is weak due to ample supplies which could grow because arbitrage volumes from the West to Asia could rise to 3.5 million tonnes in the next two months, up from an expected 2 million tonnes, traders said.

“Until last week the market expected just over 2 million in July and August, but now we are probably seeing about 3.5 million tonnes. There is still pressure on the market,” the second trader said. He said volumes were off highs of 5 million tonnes eight or nine months ago but there would also be a seasonal slowdown in demand.

“Inventories are already at a very high level and traders are selling cargoes at a very low price,” the second trader said. Onshore fuel oil stocks in Singapore jumped to a record 31.18 million barrels last week, official data showed.

Traders said on and offshore inventories could climb higher as demand slows.

TENDERS:
– Korea East West Power Co Ltd (EWP) is inviting tenders by June 10 for the supply of 30,000 tonnes of high sulphur fuel oil for delivery at Ulsan between June 22-26, the utility said on its website. (www.ewp.co.kr/eng)

MARKET NEWS:
– Trafigura said its trading volumes of oil and petroleum products climbed to a new record, topping more than 4 million barrels per day in the first half to March 31.

– Thailand’s top three refineries will run at full volumes during the third quarter to offset the fall in output from a petrochemical plant that has shut for maintenance, executives said on Tuesday.

SINGAPORE CASH DEALS: Four trades reported.
– Coastal bought 20,000 tonnes of 380-cst high sulphur fuel oil from Glencore at $234 per tonne for loading between July 3-7.

– Hin Leong bought 20,000 tonnes of 380-cst high sulphur fuel oil from Mercuria at a discount of $3.50 to Singapore quotes for loading between July 1-5.

– Hin Leong bought 20,000 tonnes of 180-cst high sulphur fuel oil from PetroChina at the balance of the June average minus $2.25 per tonne for loading between June 23-27.

– Hin Leong bought 20,000 tonnes of 180-cst high sulphur fuel oil from Glencore at a discount of $3.50 to Singapore quotes for loading between June 27-July 1.

 FUEL OIL                                                                         
 CASH ($/T)              ASIA      Change   %        Prev Close    RIC
                         CLOSE              Change                 
 Cargo - 180cst            236.19     2.58     1.10        233.61  FO180-SIN
 Diff - 180cst              -3.85     0.00     0.00         -3.85  FO180-SIN-DIF
 Cargo - 380cst            231.11     2.80     1.23        228.31  FO380-SIN
 Diff - 380cst              -4.23     0.00     0.00         -4.23  FO380-SIN-DIF
 Bunker (Ex-wharf)-        230.56     2.90     1.27        227.66  BK380-B-SIN
 380cst                                                            
 Bunker (Ex-wharf)          -0.55     0.10    15.38         -0.65                 
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Source: Reuters

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