SINGAPORE: Asian fuel oil cash differentials increased on Thursday on the back of limited barrels in the spot market, traders said. But this could change over the coming week as supply is expected to rise, one of them said.
- FLOATING STORAGE: Fuel oil barrels being stored in vessels offshore are slowly being sold into the market, a Singapore-based fuel oil trader said. The number of very large crude carriers (VLCCs) storing fuel oil has fallen to about 4 to 5 from a peak of 8 to 9, he added.
"There are just a few (companies) who snapped up the cargoes recently, so they are holding onto the available supply," he said.
This in turn is boosting prices in the bunker market for prompt cargoes, he added.
Storing of fuel oil in vessels is unusual in a backwardated market when prompt prices are higher than forward prices, making it difficult for traders to recover the costs of storage.
For instance, prompt bunker cargo differentials are trading at a premium of about $5 to $6 a barrel, he said. But the prices for cargoes loading 10 days forward are trading at about $3.50 to $4 a barrel, which is still higher than usual, he said.
- SINGAPORE STOCKS: Singapore fuel oil stocks surged by 27 percent to hit a six-week high of 22.195 million barrels, latest data from International Enterprise showed.
Stocks are expected to be higher as barrels from the West enter Singapore in June, a trader said.
- FALL IN CRUDE OIL PRICES: Buyers are standing back amid uncertainty as underlying crude oil prices fell this week, a Singapore-based fuel oil trader said.
"The way prices fell on Thursday was scary," he said. "A few small players are now sidelined amid uncertainty over the way prices will go."
INDIAN OIL OFFERS: Indian Oil Corp offered a July-loading cargo from Chennai, a tender document showed.
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