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Asia Fuel Oil-Market weakens despite rebound in physical trade

865ee19DUBAI, – Asia’s fuel oil complex slipped as concerns of ample prompt supplies weighed on market sentiment further despite a rebound in physical trading activity in the Platts window, industry sources said. Cash discounts of the 380-cst fuel slipped to a near 8-month low despite a revival of buying interest for physical cargoes while in the paper market. Traders said poor market sentiment and falling crude oil prices weighed on prompt month time spreads, refining margins and arbitrage spreads of the industrial fuel. A total of 240,000 tonnes of fuel oil traded in the window through 11 deals, including 220,000 tonnes of 380-cst fuel and 20,000 tonnes of 180-cst fuel, industry sources said. PetroChina, the lead buyer of 380-cst fuel, snapped up six cargoes while Mercuria took two cargoes followed by BP and Hin Leong which each bought one. Since the start of March, PetroChina has bought 820,000 tonnes of 380-cst fuel oil through the Platts window. Suppliers of 380-cst fuel on were led by Shell with three cargoes, followed by Glencore, Total and Koch which supplied two cargoes each, and Lukoil with one cargo. Mercuria was the sole buyer of 180-cst fuel, which was supplied by BP. As an anticipated bullish trading play in March looks increasingly unlikely due to ample prompt fuel oil supplies as well as falling crude prices, traders said the elevated deals activity in the window was likely a result of opportunistic buying amid depressed prices. Cash discounts of 380-cst fuel widened by 39 cents a tonne from the previous session to $1.56 a tonne below Singapore quotes, their lowest since Aug. 8. ARBITRAGE FLOWS Total fuel oil flows into East Asia for March are expected to close around 7.5 million tonnes for a third consecutive month, with over 7.0 million tonnes assessed so far, as cargoes continue to flow, assessments by Thomson Reuters Oil Research showed. Heavy arrivals were led by high volumes from the Middle East, expected to close at around the all-time high of 1.8 million tonnes, while Western arbitrage inflows have closed at above-average levels for a third consecutive month at 4.7-4.8 million tonnes.

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