SINGAPORE: Asia's fuel oil market languished on Wednesday, with only moderate activity seen for the swaps contracts, as the demand outlook remained depressed by high prices tracking the strong Brent crude benchmark.
The March swaps contract rose to $752.13 a tonne by the Asian close, the highest level for a front-month contract since July 17, 2008, Reuters data showed.
High outright prices encouraged sellers to price spot cargoes on a flat-price basis instead, with three out of the four deals transacted on such basis during the trading window.
This has also pressured the premiums physical cargoes are able to fetch, with India's Bharat Petroleum (BPCL) cancelling its tender for a March 27-29 lifting parcel from Mumbai due to poor bids, according to industry sources.
Taiwan's demand for fuel oil in January eased nearly 10 percent to 89,982 barrels per day, while exports from the country rose to 141,055 tonnes, government data showed.
Formosa Petrochemical Corp has only sold its standard monthly offering of 40,000 tonnes of high-sulphur fuel oil and 15,000 tonnes of pyrolysis fuel oil for March lifting, with no additional cargoes offered so far.
Bunker demand has also been pretty badly hit, with end-users taking limited supplies from Asia's largest bunkering port.
"Demand volumes are not coming in. On a delivered basis, Malaysia may be cheaper at the moment," a bunker source said.
Copyright Reuters, 2012
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