Asia Fuel Oil-380-cst spreads trend lower on supply concerns, cash premiums steady

DUBAI: Time spreads for the front month 380-cst contract edged higher on Monday from the previous session but have trended lower over the past week amid a persistent supply overhang after official data showed higher Singapore inventories last week.

By contrast, sustained buying interest in physical markets continued to support cash premiums of 380-cst fuel oil.

SWAPS

- Liquidity in 380-cst time spreads was limited on the Intercontinental Exchange (ICE) by 1800 Singapore time (1000 GMT) on Monday.

- Trading just 5,000 tonnes in contracts, the front month 380-cst May/June spread contract pared some loses from the previous session, narrowing to a 65 cent a tonne contango, up 10 cents from the previous session.

- A persistent supply overhang has seen the front month spread contract trending lower since the start of last week when the same May/June contract traded at a premium of 25 cents a tonne on the previous Monday.

WINDOW TRADES

- 16 cargo trades were reported in the Platts window on Monday totalling 300,000 tonnes of 380-cst fuel oil through 15 cargoes, along with one 20,000 tonne cargo of 180-cst fuel oil.

- PetroChina was again the top buyer of 380-cst fuel oil, lifting 9 of the 15 traded cargoes on Monday.

- A total of 2.32 million tonnes of 380-cst fuel oil have traded in the window since the start of April.

- 380-cst fuel oil cash premiums were assessed 15 cents a tonne higher from the previous session at $1.07 cents a tonne above Singapore quotes.

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REFINERIES

- Japanese oil refiners have cut the nameplate crude refining capacity by 11 percent from April 2014 levels to 3.52 million barrels per day (bpd) to meet a government targets requiring refiners to increase their ratios of residue cracking units to CDUs by March 2017.

- As a result of cuts to refining capacity across Japan, JBC Energy on Monday said the share of Japanese fuel oil and naphtha in core refined product output over the first few days of April has been down by a strong 3.5 percent year-on-year.

- JBC says Japan could see its net-import requirement increase by 40,000 bpd y-o-y until the end of the year.

- Indonesian state-owned Pertamina resumed operations of a crude unit at its 260,000-barrel-per-day Balikpapan refinery on Monday after planned maintenance work, said the company in a statement.