11-06-2016

Asia Fuel Oil-Spreads diverge amid uncertainty on oil price direction

fueloil

Asian fuel oil spreads diverged on Friday on muted buying activity amid wider uncertainty among traders on which way prices are heading, traders said on Friday.

That came as oil prices fell on Friday from 2016 highs hit earlier this week after a rebound in the dollar.

While the number of bids and offers were evenly balanced, there was a difference of up to $7 between some of the potential trades, while only one trade was concluded during the Platt’s window on Friday.

“Most traders are sitting on the sidelines so as not to look stupid” (if prices move in the wrong direction), a Singapore trader said on Friday.

That came as time spreads for 180-centistoke high sulphur fuel dropped to a discount of $5.25 on Friday, the lowest since Oct. 30, data on the Reuters Eikon terminal showed.

Spreads for 380-cst fuel tightened to a discount of $3.50 on Friday. They fell to a discount of $5.25 on Thursday, the lowest since Oct. 27.

“Fundamentals have not changed – there are still ample supplies, but there is uncertainty in the market which is weighing on sentiment,” said a second Singapore trader.

Onshore fuel stocks in Singapore fell to a four-week low of 28.41 million barrels in the week to June 8, although this is still higher than a year ago, according to data from International Enterprise (IE) Singapore released on Thursday.

“While the market is well-stocked, people are looking at potential supply disruptions and unplanned outages, including attacks on Nigeria’s oil production, and wondering how that will impact prices and the market,” the second trader said.

MARKETS NEWS:
– Oil demand is set to surge in the short-term as refining capacity hits a record, yet the gains may not hold as a flood of fuel gluts the market, eroding profit margins and eventually forcing refiners to cut runs and crude orders.

– Oil products exports via the Lukoil controlled Baltic Sea port of Vysotsk are set to rise by 26.5 percent in June from May to 1.175 million tonnes, according to industry
sources.

– India’s fuel oil sales rose 17 percent in May compared with the same month last year, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed on Friday.

TENDERS:

– South Korea’s Korea Western Power Co Ltd has bought 90,000 tonnes of high sulphur fuel oil from Hyundai Corp for arrival in June and July via two tenders each for 45,000 tonnes that closed on June 9, a source from the utility said on Friday.

SINGAPORE CASH DEALS: One trade reported.
– SK bought 40,000 tonnes of 380-cst high sulphur fuel oil from Phillips66 for July 2-6 loading at a discount of $1 to the balance of June average prices.

 FUEL OIL                                                                        
 CASH ($/T)            ASIA      Change   % Change  Prev Close    RIC
                       CLOSE                                      
 Cargo - 180cst          243.08    -4.25     -1.72        247.33  FO180-SIN
 Diff - 180cst            -3.19     0.01      0.31         -3.20  FO180-SIN-DIF
 Cargo - 380cst          239.06    -3.77     -1.55        242.83  FO380-SIN
 Diff - 380cst            -4.31    -0.91    -26.76         -3.40  FO380-SIN-DIF
 Bunker (Ex-wharf)-      240.34    -1.80     -0.74        242.14  BK380-B-SIN
 380cst                                                           
 Bunker (Ex-wharf)         1.28     1.59     85.51         -0.69                 
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Source: Reuters

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