Asia Fuel Oil-Prompt spreads rise as Singapore inventories sink to a 3-month low

In International Shipping News 27/04/2017

The 380-cst front-month time spread widened its backwardated structure on Thursday, pointing to further signs of improving market sentiment that was supported by falling Singapore inventories.

SINGAPORE INVENTORIES

– A surge in export volumes in the week to April 26 dragged Singapore onshore fuel oil inventories 9 percent lower, or 360,000 tonnes, to a three-month low of 3.48 million tonnes, official data showed.

– Net imports during the week fell to their lowest level since Dec. 14 at 385,000 tonnes as imports growth, at 3 percent, was dwarfed by the 171 percent spike in exports, amid soaring shipments to China.

– The decline in fuel oil inventories was the largest, in volume and percentage terms since the week ended Jan. 4.

SWAPS MARKET

– Broker sources said the 380-cst May/June time spread widened in trade on Thursday, rising from a premium of 50 cents a tonne to 65 cents a tonne during Asia intra-day trade.

– By comparison, the 380-cst May/June contract was trading at a premium of about 10 cents a tonne on Monday.

WINDOW TRADES

– Seven cargo trades were reported in the Platts window on Thursday totalling 140,000 tonnes of 380-cst fuel oil.

– Thursday’s deals were concluded at roughly the same values as in the previous session, leaving 380-cst cash premiums FO380-SIN-DIF little changed.

– A total of 3.52 million tonnes of 380-cst fuel oil have traded in the window since the start of April.

2H CRACKS PRESSURED

– Singapore fuel oil refining margins are forecast to average about -$5.90 per barrel in the second half of 2017, weighed down by an overall increase in global supplies of the fuel by about 80-130 thousand barrels per day, FGE said.

– Indian hydrocracker upgrades are seen contracting Asian supplies during that time but these will be more than offset by arrivals of surplus barrels from other regions, particularly Latin America but also the Middle East.

TENDERS

– Sri Lanka’s Ceypetco seeks 35,000 tonnes of low-sulphur fuel oil for delivery on June 1-2.

– India’s Reliance sold 40,000 tonnes of May 10-11 carbon black feedstock (CBFS) to Trafigura at an unknown price.

– Taiwan’s Formosa sold 10,000 tonnes of pyrolysis fuel oil (PFO) to Simosa at a $30-35 premiums to Singapore 180-cst quotes, FOB basis.

– Mexico’s CFE bought up to 4 million barrels of high sulphur fuel oil from Pemex’s tradoing arm, PMI, at an unknow differential to U.S. Gulf Coast quotes.

    ASSESSMENTS
 FUEL OIL                                                                                   
 CASH ($/T)                  ASIA CLOSE      Change   % Change   Prev       RIC
                                                                 Close      
 Cargo - 180cst                      300.49    -3.36      -1.11     303.85  FO180-SIN
 Diff - 180cst                         1.41    -0.07      -4.73       1.48  FO180-SIN-DIF
 Cargo - 380cst                      292.70    -2.85      -0.96     295.55  FO380-SIN
 Diff - 380cst                         1.37     0.04       3.01       1.33  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst           295.00    -3.50      -1.17     298.50  BK380-B-SIN
 Bunker (Ex-wharf) Premium             2.30    -0.65     -22.03       2.95

Source: Reuters (Editing by Greg Mahlich)