Asia Fuel Oil-Viscosity spread narrows to 3-1/2 month low

The viscosity spread, or price difference between 180-cst and 380-cst fuel oil swaps, narrowed to a 3-1/2-month low, in line with a firmer 380-cst fuel oil market.

The viscosity spread stood at $5.75 a tonne on Thursday, down from $6.50 a tonne the day
before, Reuters data showed.

Viscosity spreads tend to be squeezed when 380-cst fuel firms, or when 180-cst fuel weakens.

The 380-cst fuel oil premium was up at $1 a tonne to Singapore spot quotes, supported by
Singapore-based trader Hin Leong’s firm bids ranging $0.67-$1.76 a tonne, Reuters calculation showed.

“They seem to want to narrow viscosity and firm up 380-cst, so he is still bullish (on the
380-cst),” said a Singapore-based trader.

Hin Leong said there were no specific fundamental drivers behind its bids on Thursday.

Despite western supply of fuel oil falling to a two-month low, premiums have been relatively unresponsive to the tighter supplies, largely due to weak Asian fuel oil demand, traders said.

However, others said that rising costs to charter vessels to bring cargoes from the West
into Asia could further curb supply flows, thus fuelling some bullish sentiment.

In other market news, Japan’s top oil refiner, JX Holdings, plans to process 974,000 barrels
per day (bpd) of crude oil in July for domestic consumption, down 22 percent from a year
earlier, hit by a heavier maintenance schedule, a spokeswoman said on Thursday.

Its crude refining for domestic consumption in June was estimated at 809,000 bpd, down 23 percent from the year-earlier period and a record low for the month, compared with a revised
plan of 820,000 bpd.

Onshore fuel oil stocks in Singapore were relatively steady, down marginally by 37,000
barrels or 0.2 percent to a two-week low of 21.862 million barrels (3.44 million tonnes) in the
week to June 25, data from trade agency IE Singapore showed on Thursday.
Source: Reuters (Reporting by Jane Xie; Editing by Anand Basu)