SINGAPORE: Spreads for 380-centistoke high sulphur fuel plunged to a seven-month low on Thursday after official data showed Singapore was well stocked with fuel oil despite stocks falling to a four-week low, traders said.
Reuters Eikon data showed spreads for 380-cst fuel weakened to a discount of $5.25 per tonne, the lowest since Oct. 27, while spreads for 180-cst fuel widened to a discount of $4.75 per tonne, the lowest since Dec. 22.
While spreads have weakened, Singapore traders on Thursday said some in the market were trying to tighten spreads citing persistent violence in Nigeria, which has disrupted oil production.
"Some are using the Nigeria issue to try to narrow prices," a Singapore
trader said.
Refineries from India to the United States are backing away from buying Nigerian oil as the government squares up to militants in the restive Delta region.
Onshore fuel stocks in Singapore fell by 2.78 million barrels to 28.41 million barrels in the week to June 8, according to data from International Enterprise (IE) Singapore released on Thursday.
That is down from the record 31.18 million barrels held by up to 13 major
oil and oil storage companies as of June 2, IE data showed last week.While inventories fell they are still higher than June 10, 2015, when volumes were around 27.29 million barrels.
The Singapore trader said the market is "definitely" oversupplied with fuel oil.
Official data showed fuel oil imports climbed to 1.67 million tonnes in the week to June 8, compared with 1.29 million tonnes a week earlier.
Imports from Russia, the Netherlands, Malaysia and the United Arab Emirates accounted for 1.03 million tonnes, IE data showed.
Exports rose to 829,880 tonnes, from 660,000 tonnes in the previous week with Malaysia, South Korea, Bangladesh and Taiwan taking a total of 641,329 tonnes.
The October start of the second phase of Qatar Petroleum's Ras Laffan refinery will add to the oversupply in the Asian fuels market while reducing the Emirates condensate exports, energy consultancy BMI Research said in a report on Thursday.
More than 2 million barrels per day of new refining capacity is planned to come online in Asia in the next five years which will reduce the need for fuel imports, BMI Research said in a separate report on Thursday.
MARKET NEWS:
- Iran raised the official selling price (OSP) of its Iranian Light grade for Asian buyers by 35 cents to 85 cents a barrel above the Oman/Dubai average for July, an industry source with direct knowledge of the matter said on Thursday.
SINGAPORE CASH DEALS: Two cash trades reported:
- Coastal bought 20,000 tonnes of 380-cst high sulphur fuel oil from Glencore at the balance of June average prices for loading between July 5-9
- Hin Leong bought 20,000 tonnes of 380-cst high sulphur fuel oil from Coastal at a discount of $3 per tonne to Singapore prices for loading between June 27-July 1.
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