Asia Fuel Oil-180-cst cash premium rises to 3-month high
Wednesday, 05 September 2012 | 00:00
Asia's fuel oil market held onto its strength on Tuesday, with cash differential for the 180-centistoke (cst) grade inching up to its highest in three months as sentiment continued to be supported by low supply levels.
Cash differential for the 180-cst gained 45 cents to a premium of $5.30 a tonne above Singapore spot quotes.
Inter-month swaps for the 180-cst fuel oil were also strong. The balanced September/October inter-month spread was valued at a backwardation of $5.75 a tonne by the Asian close at 0830 GMT.
More interest was seen for the second-month October/November inter-month spread, with close to 700,000 tonnes traded. The contract was valued at a backwardation of $4.25 a tonne by the Asian close, 13 cents higher than the previous session.
Fixed-price swaps contracts were also actively traded, with Brightoil emerging as a major player during the trading window. The Hong Kong-listed trader sold 65,000 tonnes of the September 180-cst fixed price contract, and bought 30,000 tonnes of the October 180-cst contract.
Traders said that low inventory levels continued supported sentiment, especially when low-viscosity supply is tight. The prompt viscosity spread, the price difference between the 180-cst and 380-cst fuel oil, has surged to close to $16.00 a tonne.
However, heavy arbitrage arrivals for the first half of September, are likely to cause inventory to build up, thus easing fundamentals.
- India's Essar Oil sold 45,000 tonnes of 380-cst, for Sept. 18-26 lifting from Vadinar, to PetroChina at an unspecified price.
* CASH DEALS: Two 180-cst and two 380-cst deals
- Vitol bought 20,000 tonnes of 380-cst, for Sept. 30-Oct. 4 loading, from Mercuria at a premium of $4.00 a tonne to Singapore spot quotes.
- Hin Leong bought 20,000 tonnes of 380-cst, for Sept. 24-28 loading, from Mercuria at a premium of $4.00 a tonne to Singapore spot quotes.
- Gunvor bought 20,000 tonnes of 180-cst, for Sept. 19-23 loading, from Kuo Oil at a premium of $6.00 a tonne to Singapore spot quotes.
- Gunvor bought another 20,000 tonnes of 180-cst, for Sept. 24-28 loading, also from Kuo Oil at a premium of $5.00 a tonne to Singapore spot quotes.