Asia Fuel Oil-180-cst flips into contango – first time since May 12

The 180-cst fuel oil structure flipped into a contango on Thursday for the first time in nearly two months, signalling a weaker market where future-dated cargoes are worth more than spot parcels due to poor demand of the 180-cst as a cutter stock.

The price difference between July and August 180-cst swaps stood at minus 25 cents a tonne on Thursday, down 25 cents a tonne from the day before, Reuters data showed.

The cash discount also widened for the third straight session to hit a near two-month low of
minus $1.39 a tonne to Singapore spot quotes.

One 180-cst cargo was traded at discount of around $1.50-1.60 a tonne to Singapore spot
quotes during cash trading on Thursday.

Only 1.89 million tonnes of fuel oil will arrive in Asia from the United States and
Caribbean this month, versus 2.47 million tonnes in June.

Heavy fuel oil from the Americas can be as viscous as 700-centistoke and needs to be blended with less viscous material, such as the 180-cst, to produce fuel oil which is tradable in Asia.

With fewer of such heavy fuel oil cargoes due to arrive in July, the demand for 180-cst
dropped consequently, traders said.

In the marine fuel segment, bunker traders said enquiries for marine fuel oil on Thursday
improved alongside lower crude prices, which resulted in more attractive fuel oil prices.

“Demand today is good, with people selling cheap,” said a Singapore-based fuel oil trader.

The ex-wharf 380-cst bunker price stood at $603.50 a tonne — the first time in three weeks
when it fell below the $610 a tonne mark, Reuters data showed. BK380-B-SIN

In other news, Singapore’s onshore residual stocks rose 6 percent, or 1.337 million barrels,
to a five-week high of 23.199 million barrels (3.65 million tonnes), data from trade agency IE
Singapore showed on Thursday.

Imports rose marginally by 3.7 percent to 1.04 million tonnes, with shipments from India –
which were absent the week before — at around 140,000 tonnes, while that from Venezuela and the United States were both down more than 100,000 tonnes each.

Shipments out of Singapore rose by more than 50 percent, led by exports to South Korea which tripled and to China, which received more than 70,000 tonnes versus just 4,700 tonnes the week before, the data showed.

*CASH TRADES – One deal.

Glencore sold to Hin Leong 20,000 tonnes of 180-cst for July 18-22 at a discount of $1.50 a tonne to balance July spot quotes.

*TENDER NEWS

South Korea’s East-West Power is seeking 50,000 tonnes of high sulphur fuel oil for July
27-31 arrival into Ulsan via a tender that will close on July 10.

Indian Oil Corp is offering 35,000 tonnes of 380-cst for loading over July 25-27 from
Chennai in a tender that will close July 10, with bids to remain valid until the next day.

The refiner is also offering a smaller parcel of 15,000 tonnes for loading from Haldia over
July 20-22 in a tender that will close on July 7, with bids to remain until July 8.

*MARKET NEWS

Brent crude futures dipped below $111 a barrel on Thursday as supply fears began to ease
after Libya declared an end to an oil crisis that has slashed exports from the OPEC member.

Libya’s government said it had reached a deal with a rebel leader controlling oil ports to
hand over the last two terminals and end a blockade, potentially making an extra 500,000 barrels per day (bpd) of crude available for export.
Source: Reuters (Reporting by Jane Xie; Editing by Prateek Chatterjee)