Asia Fuel Oil-Tighter supply outlook lifts cash differentials


Asia fuel oil cash differentials narrowed their discounts on Monday as expectations of thinner Western arbitrage flows will help clear
excess Singapore supplies, industry sources said.

Despite weeks of continued market pressure from ample prompt supplies, the 380-cst cash differential rose to its highest since May 30, narrowing by $1.41 a tonne to a discount of $2.90 a tonne to Singapore quotes, Reuters data showed. FO380-SIN-DIF

Similarly, the benchmark 180-cst fuel oil cash discount narrowed by 45 cents a tonne to $2.74 a tonne below Singapore quotes, its highest since May 31. FO180-SIN-DIF

In paper markets, the June-July time spreads narrowed their contango structure firmly in early trading on expectations of tightening supplies but then reverted to their previous close amid mounting selling pressure later in the day, traders said.

The 380-cst June-July spreads narrowed their discounts by as much as $1 a tonne in early Monday trading before settling flat to their Friday close at $3.50 a tonne below Singapore quotes.

The 180-cst also narrowed their June-July time spreads by as much as $2.50 a tonne in early trading before returning to their previous close at $5.50 a tonne below Singapore quotes.

Western arbitrage arrivals into East Asia for July were provisionally assessed at 2.9 to 3.1 million tonnes in the week to June 6, with full-month volumes pegged at 4.0 to 4.2 million tonnes, which is largely flat to volumes in June of 3.95 million tonnes, according to assessments by Thomson Reuters Oil Research and Forecasts released on Friday.

“The outlook for the month remains fairly steady despite more attractive freight rates which would normally have drawn a deluge of tanker bookings for July arrival flows of the heavy residue, particularly from Europe,” said the assessment report.


– Chinese independent oil companies are luring traders, marketers and risk managers away from dominant state behemoths, offering better pay and perks in a hiring spree triggered by the freeing up of China’s crude import trade.

– Oil traders at the U.S. storage hub of Cushing, Oklahoma are betting stocks will fall by the most since early autumn, due to the twin effect of declining Canadian supplies and strong Gulf Coast demand.

– Singapore-based commodities trader Noble Group NOBG.SI said on Monday it has hired Morgan Stanley and HSBC as advisors on the planned sale of its Noble Americas Energy Solutions (NAES) unit, targeting completion of the deal in the second half of the year.

– Korea East West Power Co Ltd bought 30,000 tonnes of high sulphur fuel oil from Mercuria for the Ulsan power plant via a tender that closed on June 10, a source from the utility said on Monday.

SINGAPORE CASH DEALS: Three trades reported. For further details, please see

 FUEL OIL                                                                                  
 CASH ($/T)                  ASIA CLOSE       Change   % Change  Prev      RIC
 Cargo - 180cst                       238.98    -4.10     -1.69    243.08  FO180-SIN
 Diff - 180cst                         -2.74     0.45    -14.11     -3.19  FO180-SIN-DIF
 Cargo - 380cst                       235.54    -3.52     -1.47    239.06  FO380-SIN
 Diff - 380cst                         -2.90     1.41    -32.71     -4.31  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst            236.54    -3.80     -1.58    240.34  BK380-B-SIN
 Bunker (Ex-wharf) Premium              1.00    -0.28    -21.88      1.28

Source: Reuters 

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