Asian fuel oil prices rebounded on Monday, but the market remained weak on bearish December sentiment, staying below the $500-mark for a fourth session while crack spreads weakened to its lowest level in a month. December supplies were boosted by a fifth-straight Saudi offering and the prospect of more arrivals from South Korea, as demand from China remained tepid.
However, oil major BP and European trader Projector maintained their support of the market, soaking up another 20,000-tonne cargo each but at lower premium levels, bringing the total transacted volumes since October 31 to 1.66 million tonnes. The benchmark 180-cst grade rose $7.25 to $499.15 a tonne, but its premium slipped to $2.20, down $1.05, on the deals.
BP bought a cargo for December 9-13 loading from Westport at a premium of $2.00 to spot quotes, while Projector bought another lot for December 15-19 lifting at a $2.50-premium. The upside was limited by Westport's offer for 20,000 tonnes, for December 5-9 loading, at a premium of $2.00 a tonne to spot quotes.
The 380-cst bunkers grade recovered by $7.48 to $486.13 a tonne, but its differential eased to a parity, the lowest since September 28, on two cash offers by PetroChina. The Chinese major offered 20,000 tonnes, for December 4-8 and December 15-19 loading, at discounts of $10 a tonne to December average 180-cst quotes, equivalent to a premium of 21 cents a tonne to spot quotes, and at a discount of $8.00 to January average quotes, equivalent to a 33-cent premium, respectively.
The downside was limited by Shell's bids for 20,000 tonnes, loading on December 9-13 and December 15-19, at parity to spot quotes. The product's December crack spread to Dubai weakened for a fifth session to minus $10.35 a barrel, down 65 cents and its lowest since October 8. The fuel oil swaps market also saw heavy trade, with 120,000-130,000 tonnes of mainly front-month December 180-cst done at $496.25-$497.00 a tonne.
South Korean refiners will export 430,000 tonnes of fuel oil for December, down about 22 percent from November but well above monthly average volumes of 303,000 tonnes.
Substantial volumes of the exports were expected to find their way to Singapore, as demand in China remained poor with high outright prices still sidelining buyers. Dampening December sentiment further, Saudi Aramco offered 90,000 tonnes of A961 180-cst, of low 0.98 density and 3.6-3.7 percent sulphur, for December 7-9 loading from Ras Tanura, on a free-on-board (FOB) basis.
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