SINGAPORE: Asia's high sulphur fuel oil market complex was little changed on Wednesday after two sessions of declines, supported by higher-cost replacement barrels stemming from structurally tighter global supplies.
While arbitrage flows from the West and the Arabian Gulf into Asia are rising, traders said the market complex was expected to seesaw around current levels due to the relatively high costs of resupply.
"I don't think we'll dive to big discounts (over the near term) maybe flat at worst because resupply ain't cheap," said one Singapore-based fuel oil trader.
Premiums of the 380-cst fuel Feb/March time spreads were initially trading lower on the Intercontinental Exchange (ICE) on Wednesday but later recovered to Tuesday's settlement at around $2 a tonne by 17:00 Singapore time (09:00 GMT) after physical trading in the Singapore Platts window was concluded, industry sources said.
In the physical market cash premiums of the 380-cst fuel oil were down 6 cents from the previous session at $2.37 a tonne above Singapore quotes. Three cash deals totalling 60,000 tonnes were done in the window at similar price levels to Tuesday, market sources said.
Premiums of the less actively traded 180-cst fuel were also lower, slipping to a three-month low of 34 cents a tonne above Singapore quotes after shedding 14 cents a tonne from the previous session.
In tenders, Saudi's SAMREF, an equally owned joint venture between Saudi Aramco and Exxon Mobil, is offering 80,000 tonnes of high-sulphur fuel oil for Feb. 15-19 delivery at the port of Yanbu.
The tender closes on Jan. 18.
In related news, the Fujairah Oil Industry Zone on Wednesday published its first weekly inventory data via S&P Global Platts.
As of Jan. 16, inventories of heavy distillates and residues in the storage hub totalled 10.36 million barrels, or approximately 1.55 million tonnes.
This compares with 21.98 million barrels (or 3.28 million tonnes) of onshore fuel oil inventories held by the 13 major oil and oil storage companies in Singapore in the week to Jan. 11.
Fujairah Oil Industry Zone hosts the Middle East's largest commercial storage capacity for refined products.
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