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Asia Fuel Oil-Refining margins at 6-week high, physical premiums edge higher

by April 25, 2017 General

Fuel oil refining margins edged higher to a six-week high on Tuesday, buoyed by weak crude oil prices, while 380-cst cash premiums edged higher as buying interest from PetroChina resurfaced.

May refining margins of 180-cst fuel oil edged higher towards a new 6-week high as crude prices remained weak.

The 180-cst fuel oil crack to Dubai crude rose 15 cents from the previous session to minus $3.42 a barrel, while 180-cst margins to Brent crude slipped to minus $4.84 a barrel, up 21 cents from Monday.

South Korea’s top refiner SK Energy, said it expects strong demand for gasoline to support Asian refining margins DUB-SIN-REF in the current quarter.

Asian refined product margins could also be supported by operational limitations on China’s independent refiners, as well as lower Chinese export quotas on refined products, the company said.

Eleven cargo trades were reported in the Platts window totalling 220,000 tonnes of 380-cst fuel oil with most trades being concentrated at the middle and back-end of the window.

Lifting nine of Tuesday’s traded cargoes, PetroChina was the main buyer followed by CAO and Coastal with one each.

Sellers of the cargoes were mixed with Koch, Lukoil and Total supplying three each while BP and Shell each sold one.

380-cst fuel oil cash premiums FO380-SIN-DIF were 11 cents a tonne higher than the previous session at a premium of 92 cents a tonne to Singapore quotes.

A total of 3.32 million tonnes of 380-cst fuel oil have traded in the window since the start of April.

Ex-wharf premiums, a key indicator of prompt market fundamentals, remained firm around $2-$3 per tonne in April so far compared to about $1-$2.50 per tonne in March.

Premiums of the break-bulk parcels of fuel oil were supported by firm cargo premiums and steady demand for bunker fuels, which have largely exceeded expectations this year so far.

China imported 1.31 million tonnes of fuel oil in March, up 46 percent from a year earlier, while exports of the fuel during the month fell 20 percent to 0.63 million tonnes.

 FUEL OIL                                                                                       
 CASH ($/T)                  ASIA CLOSE        Change    % Change    Prev Close  RIC
 Cargo - 180cst                        302.28     -4.53       -1.48      306.81  FO180-SIN
 Diff - 180cst                           1.59     -0.28      -14.97        1.87  FO180-SIN-DIF
 Cargo - 380cst                        293.41     -4.14       -1.39      297.55  FO380-SIN
 Diff - 380cst                           0.92      0.11       13.58        0.81  FO380-SIN-DIF
 Bunker (Ex-wharf)- 380cst             296.50     -3.00       -1.00      299.50  BK380-B-SIN
 Bunker (Ex-wharf) Premium               3.09      1.14       58.46        1.95

Source: Reuters (Editing by David Evans)