Asia Fuel Oil-380cst cash premiums at highest in nearly six weeks

Cash premiums for 380cst fuel oil rose for a fifth consecutive session to reach nearly six-week highs on Thursday, boosted by strong demand even though Singapore’s fuel oil inventories are rising.

380cst premiums rose to 46 cents a barrel to Singapore quotes, up 26 cents from the previous day and to their highest since March 28.

Three cash deals totalling 60,000 tonnes of 380cst fuel oil were reported in the Platts window. Lukoil was the only seller, with three of its offers taken up by Glencore, PetroChina and Mercuria for a price ranging between a 5 cent premium and a 60 cent premium above Singapore quotes, industry sources said.

In the swaps market, the 380cst May-June contract narrowed its contango from Wednesday’s minus 50 cents to minus 25 cents a barrel to Singapore quotes. A contango market structure suggests nearby supplies are plentiful.

In contrast, 380cst ex-wharf differentials weakened and were at a discount of 50 cents a tonne to Singapore quotes due to a growing supply and demand imbalance.

“The increase in (onshore Singapore) supplies we saw today is tilting the supply and demand balance,” one Singapore-based trader said. The supply and demand balance is “quite ugly,” another Singapore trader said, citing the high inventory levels in Singapore.

SINGAPORE ONSHORE STOCKS:

Onshore stocks of Singapore fuel oil rose 5.4 percent to a 7-week high of 27.86 million barrels in the week to May 4, according to data from International Enterprise (IE) Singapore released on Thursday.

The 1.42 million barrel weekly rise in Singapore residual fuel stocks (about 213,000 tonnes) marks the third consecutive weekly build and follows the previous week’s record 4.3 million barrel inventory build as incoming arbitrage volumes from the Middle East and Europe made their way to Singapore.

Total residual fuel imports into Singapore in the week to May 4 rose by 112 percent from the previous week to a total of 2.3 million tonnes, the highest weekly import volume since the beginning of the year, IE data showed.

Russia, the United States and Indonesia were the largest net importers of fuel oils into Singapore accounting for approximately 347,000 tonnes, 343,000 tonnes, and 258,000 tonnes, respectively.

Both the United States and Indonesia reported their highest weekly import volumes of the fuel in the week to May 4 since the start of the year, exceeding their previous highs by 166 percent and 141 percent, respectively, the data showed.

Fuel oil imports from the Arabian Gulf were also sharply higher with Saudi Arabia sending 217,000 tonnes of the fuel, a 9-week high, while the UAE exported 169,000 tonnes to Singapore, its most in 10-weeks, the data showed.

Source: Hellenic Shipping News