August 24, 2011 at 1:27 pm #2154
Asia Fuel Oil-Massive buying lifts Sept/Oct, Q4/Q1
By Jason Neely | Reuters Tue, Aug 23
SINGAPORE, Aug 23, 2011 (Reuters) – Asia’s fuel oil market strengthened on Tuesday, as buying interests jumped, with massive volumes of more than a million tonnes traded in its prompt monthly and quarterly timespreads after lacklustre activity for two of the past three sessions.
Its prompt September/October timespread surged to a two-month high backwardation of nearly $6.00 a tonne with more than 200,000 tonnes of trades, while its Q4/Q1 timespread saw more than 400,000 tonnes transacted at $6.50, up from the previous session’s traded value of $6.00.
“Just when you think sentiment is easing and prices will correct, along came this massive volume out of the blue, and liftiing the timespreads to the $6.00-mark,” a Singapore-based Western trader said.
“The trigger was probably end-user hedging, looking at the huge volumes of quarterly spreads that traded across the entire curve. They probably got tired of holding out, in the face of very volatile crude, and decided to lock in some volumes before it got worse.”
Brent crude’s September contract was at $109.00 a barrel at the Asian close, up 42 cents and rising for a second straight session, while fuel oil’s September crack fell 16 cents to a discount of wider than $5.00 a barrel to Dubai crude for the first time in six session.
In line with the fundamentally strong market, cash differentials, particularly for the benchmark 180-cst grade surged to a five-month high premium stronger than $5.00 a tonne to Singapore spot quotes, while that for the 380-cst grade rose yet another fresh one-month high and held above $5.00 for a sixth consecutive session.
Reflecting the strong market, Saudi Aramco sold 90,000 tonnes of low-viscosity, low-density A961 fuel oil, for early September loading, at its highest premium levels in more than six years.
September inflows are expected to stay tight for a second straight month, with Western arbitrage inflows at below-average levels of 3.2-3.3 million tonnes for a third consecutive month, while Middle East supplies are also tight, on a continued lack of Iranian exports.
Western arbitrage inflows have been at below-average volumes for three straight months, with August volumes at 3.0-3.1 million tonnes, while September bookings were at 2.4-2.5 million tonnes so far, with no new bookings seen.
Iranian arrivals to East Asia have plunged to well below-average levels of less than 300,000 tonnes a month for both August and September, following disruptions to its domestic natural gas supplies.
(For full list of fixtures, click on O/FUELARB)
However, October levels could rebound, lifted by heavier-than-usual bookings for Caribbean-origin cargoes, amid an open West-to-East arbitrage window for October-arrival cargoes. Iranian exports could also return to normal levels, as disruptions to its natural gas supply are expected to be resolved by early October, at the latest.
SWAPS SPREADS: September/October rose for five of the last six sessions, up 38 cents to a backwardation of $5.88 a tonne by the Asian close at 0830 GMT, with a massive 220,000 tonnes traded at $5.75-$6.00, up from 105,000 tonnes in the previous session, and last bid/offer higher at $5.75/$6.00 by 1130 GMT.
Another 130,000 tonnes of October/November transacted at $4.00-$4.10 a tonne, up from 55,000 tonnes and 5,000 tonnes of December/January at $1.75.
A massive 435,000 tonnes of Q4/Q1 were traded at $6.50, up 50 cents and from just 45,000 tonnes a day ago, another 225,000 tonnes of Q1/Q2 traded at $5.00 and 120,000 tonnes of Q2/Q3 at $3.50.
Another 45,000 tonnes of the September viscosity spreads traded at $7.25, 10,000 tonnes of October at $9.00 and 45,000 tonnes of Q4 at $9.75 as well as 15,000 tonnes of the 380-cst September/October timespread at $7.50.
SWAPS OUTRIGHTS: The September and October 180-cst swaps were valued at $646.38 and $640.50 a tonne, up $14.88-$15.25, or 2.4 percent, for both, with at least 105,000 tonnes of September traded at $643.50-$646.50, up from 95,000 tonnes a day ago, by the Asian close, and last bid/offered at $644.00/$645.00 after.
Another 15,000 tonnes of October were transacted at $639.00-$640.50 a tonne, by 0830 GMT, while 50,000 tonnes of September 380-cst were traded at $639.00-$639.50 and 10,000 tonnes of October at $631.00-$631.50.
For swaps trades, click
EAST-WEST SPREADS: The East-West spreads was mixed, with its September contract up 75 cents at $31.75 a tonne, but October dipped 25 cents to $31.00, with 85,000 tonnes of September traded at $31.75-$32.00, and 15,000 tonnes each of Q4 and Q1 at $31.50 and $30.50 respectively.
SWAPS CRACKS: The September crack slipped to a discount wider than $5.00 a barrel to Dubai crude for the first time in six sessions, falling 16 cents to a discount of $5.12, while October dropped 19 cents at a discount of $5.91.
CARGO PRICES AND DIFFERENTIALS: The 180-cst grade rose for a second straight session to $651.75 a tonne, up $15.50, while the 380-cst grade surged to $645.00, up $15.40. The differentials for both the 180-cst and 380-cst grades both strengthened, after holding steady for two sessions, to respective premiums of $5.30, up 43 cents, and $5.50, up 50 cents.
TENDERS: Saudi Aramco sold up to 90,000 tonnes of A961 180-cst, for Sept. 5-7 loading from Ras Tanura, to Bakri at a premium of $7.00-$8.00 a tonne to Singapore spot quotes on a free-on-board (FOB) basis, its highest level since at least January, 2005.
ExxonMobil offered 90,000 tonnes of 700-cst, for Sept. 14-16 from its joint-venture Samref refinery in Yanbu, FOB, with a deal expected by Thursday.
Indian Oil Corp offered 30,000-35,000 tonnes of 380-cst, for Sept. 17-19 loading from Chennai, FOB, via tender which closes Aug. 25 and with a one-day validity.
CASH DEALS: Two deals – Singapore trader Hin Leong sold 20,000 tonnes of 380-cst, for loading Sept 17-21, to PetroChina at a premiums of $5.50 a tonne to Singapore spot quotes, while the Chinese major sold 20,000 tonnes of 180-cst, for loading Sept 12-16, to BP at the same premium-level.
BUNKERS: The Singapore bunker differential, the price spread between ex-wharf marine fuel prices and fuel oil cargo values, eased to a premium of $8.00, down 40 cents from the previous session, as sellers held on to high offers in the face of surging fixed-price levels.
PRODUCT RIC BID ASK MEAN PREV CHANGE % CHANGE
FO 180 CST SPOT FO180-SIN 651.50 652.00 651.75 636.25 15.50 2.44
FO 380 CST SPOT FO380-SIN 644.75 645.25 645.00 629.60 15.40 2.45 Singapore Bunker BK380-B-SIN 652.00 654.00 653.00 638.00 15.00 2.35 380 CST Bunker Premium 7.25 8.75 8.00 8.40 -0.40 FO 180 Month 1 Swap FO180SGSWMc1 646.38 631.13 15.25 2.42 FO 380 Month 1 Swap FO380SGSWMc1 639.38 624.25 15.13 2.42 FO 180 Diff FO180-SIN-DIF 5.00 5.60 5.30 4.88 0.43 8.72 FO 380 Diff FO380-SIN-DIF 5.25 5.75 5.50 5.00 0.50 10.00 (Reporting by Yaw Yan Chong; editing by Jason Neely
August 24, 2011 at 1:28 pm #4963
Here is Alert on Massive Asian Fuel Oil Buying – so it looks like Asian traders must guessed wrong & are trying cover positions with physical BBL’s before it gets worse!
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