SINGAPORE: Cash premiums of 380-cst fuel oil rose on Monday, snapping a four-session slide, as falling flat price levels encouraged buyers to lock in some supplies, industry sources said.
By contrast, 380-cst time spreads and East-West arbitrage spreads suffered selling pressure.
WINDOW TRADES
- One 380-cst fuel oil cargo trade was reported in the Platts window.
- PetroChina sold 40,000 tonnes of 380-cst high-sulphur fuel oil to BP at a premium of $1.25 a tonne to Singapore quotes.
- By comparison, Total bought from Mercuria on Friday 20,000 tonnes of 380-cst fuel oil for the equivalent of about $1 a tonne above Singapore quotes.
- 380-cst cash premiums were assessed at $1.22 a tonne to Singapore quotes, up 14 cents a tonne from the previous session.
- Premiums of the mainstay fuel oil had declined steadily over the past week, slipping from $2.10 a tonne on Monday to $1.08 a tonne on Friday.
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SWAPS MARKET
- Premiums on 380-cst time spreads, from Aug/Sept through to Oct/Nov, all narrowed on Monday amid a buildup in selling pressure.
- Broker sources pegged the 380-cst Aug/Sept and Sept/Oct contracts at a plus $1 a tonne, down about 50 cents a tonne each. The Oct/Nov contract was down 25 cents a tonne to a 50 cent a tonne premium.
- The August EW spread was also sold down to around $13.75 on Monday, making fresh arbitrage supplies increasingly uneconomical at current rates, industry sources said.
COMPLIANCE & IMO 2020
- IMO's Marine Environment Protection Committee meeting last week "yielded some clarity" on compliance issues around the 2020 sulphur cap after it approved a new bunker delivery note procedure requiring HSFO suppliers to verify supplied vessels have a scrubber installed, said JBC Energy citing IBIA.
- "The burden of compliance will be shared equally by the ship owner/charterer as well as by the supplier, which should make compliance far more difficult to evade," JBC said, adding that compliance monitoring should also be simplified.
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