Asia Fuel Oil-Cargo premiums up sharply on lower supplies

Both cash premiums on the 180-cst and 380-cst fuel oil grades jumped on Monday, on expectations of leaner supplies this month from the West and the Middle East, traders said.

The 180-cst cash premium rose to a more than three-month high of $2.70 a tonne to Singapore spot quotes, up 54 cents a tonne from Friday, while that of the 380-cst was up to a 2-1/2 month high of $2.17 a tonne, 92 cents a tonne higher than the previous trading session, Reuters data showed.

“Arbitrage supply into Asia for June is smaller and that is lending support. Power demand
from South Korea could also rise as electricity supply looks tight this summer, so that could be an outlet for fuel oil blenders,” said a Singapore-based trader.

Supplies from Saudi Arabia, another key exporter of fuel oil to Asia, are “set to plunge in
June with the stabilisation of the 400,000 barrels-per-day Saudi Aramco-Total Refining and
Petrochemical Company (SATORP),” consultancy Energy Aspects said in a note released on Saturday.

Fuel oil shipments for loading in June from Jubail, where SATORP is located, has halved from the levels in May which saw close to 300,000 tonnes shipped out, a Singapore-based shipping source said.

Besides SATORP, Jubail is also home to Saudi Aramco Shell Refinery (SASREF), which also exports fuel oil.

“Definitely seems much fewer Middle East runs,” the shipping source said.

On the demand front, Vietnam’s Petrolimex is seeking a total of 150,000 tones of fuel oil for delivery over July to September in a quarterly tender that will close June 6, with offers available until June 13, traders said on Monday.

*TENDER NEWS

India’s Mangalore Refinery and Petrochemicals Ltd is offering 80,000 tonnes of 380-cst, with a maximum sulphur content of 4 percent, for loading over August 1-3 from New Mangalore. The tender will close on June 4, and remain valid till the next day.

*CASH TRADES – One 180-cst trade.

Mitsui sold to Glencore 23,000 tonnes of 180-cst fuel oil for loading over June 18-22 at a premium of $4.50 a tonne to Singapore spot quotes.
Source: Reuters (Reporting by Jane Xie; Editing by Sunil Nair)