Bullish sentiment about declining prompt supplies helped push cash premiums for Asia’s 380-cst fuel oil to fresh 5-month highs on
“Buying interest was quite a bit stronger today compared to yesterday while suppliers were seeking higher premiums too,” said a Singapore-based trader.
After three consecutive months of falling arbitrage volumes, from April to July, the swell of Singapore fuel oil supplies is finally ebbing, improving market sentiment, traders said.
Last week, official data showed onshore supplies of Singapore fuel oil sinking to a seven-month low of 21.43 million barrels, or 3.2 million tonnes.
Since the start of August, onshore inventories have fallen by 5.2 million barrels, or 776,000 tonnes, and many industry participants said they expected further declines in the latest official weekly data released on Thursday.
“We’ll probably see a couple more declines (in Singapore onshore inventories) but we don’t expect the recent rally to last for long given that starting September, (arbitrage) volumes are rebounding and inventories could start increasing again,” the trader said.
Western fuel oil arrivals into East Asia for September have closed at 3.6 to 3.8 million tonnes, up by 10 percent from August volumes, based on the latest assessments by Thomson Reuters Supply Chain and Commodities Research.
Cash premiums of the 380-cst fuel oil FO380-SIN-DIF rose for a sixth consecutive session on Wednesday, jumping 72 cents a tonne to $1.28 a tonne above Singapore quotes.
The last time 380-cst cash premiums were higher was in late-March when intense buying interest that lasted the entire month sent premiums to nine-month highs.
– Imports of Iranian oil by four major buyers in Asia in July jumped 61.1 percent from a year earlier, marking the biggest percentage gain since April 2014, reflecting Tehran’s aggressive moves to recoup market share lost under international sanctions.
– Oil analysts have cut their price forecasts for the first time since February, as the prospect of the world’s largest producers agreeing to freeze output dims and U.S. production shows signs of gradually picking up.
SINGAPORE CASH DEALS – Two cash deals reported. For further details, please see
FUEL OIL CASH ($/T) ASIA CLOSE Change % Change Prev RIC Close Cargo - 180cst 258.42 -5.66 -2.14 264.08 FO180-SIN Diff - 180cst 1.57 -0.07 -4.27 1.64 FO180-SIN-DIF Cargo - 380cst 251.97 -4.84 -1.88 256.81 FO380-SIN Diff - 380cst 1.28 0.72 128.57 0.56 FO380-SIN-DIF Bunker (Ex-wharf)- 380cst 254.17 -5.34 -2.06 259.51 BK380-B-SIN Bunker (Ex-wharf) Premium 2.20 -0.50 -18.52 2.70
Source: Reuters (Reporting by Roslan Khasawneh; Editing by Ruth Pitchford)