SINGAPORE: Backwardation in the front-month time spread of Asia's 380-cst fuel oil rose to its widest May 5 on Monday, boosted by bullish market momentum due to expectations of fewer arbitrage arrivals in October and November, industry sources said.
The 380-cst Oct/Nov time spread rose to $3 a tonne, up from $2.75 a tonne in the previous session.
While the near-term supply and demand market fundamentals appear supportive, some traders said that the market may have become overbought given ample inventories in key storage hubs and no significant shortage of supplies following the end of peak summer demand.
WINDOW TRADES
- Two cargo trades were reported in the Platts window, totalling 40,000 tonnes of 380-cst fuel oil.
- PetroChina sold two 20,000 tonne cargoes of 380-cst high-sulphur fuel (HSFO) to Hin Leong at a premium of about $1.75 to $1.90 a tonne to Singapore quotes, sources said.
- The weaker deal values on Monday dragged on 380-cst fuel oil cash differentials, which were at $1.89 a tonne above Singapore quotes, down from a near three-month high of $2.14 in the previous session.
- On Friday, strong buying interest saw three 380-cst fuel oil cargoes change hands at premiums as high as $2.35 a tonne to Singapore quotes, boosting cash premiums of the fuel to their highest since June 29.
- A total of 2.082 million tonnes of fuel oil has traded in the window since the start of the month, against 1.402 million tonnes in August.
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