Asia Fuel Oil-Differentials weaken without significant pick up in demand

Differentials on both the 180-cst and 380-cst fuel oil grades softened on Wednesday as poor demand continued to weigh on the market despite a tighter supply of the residual fuel.

The 180-cst discount widened to a more than two-month low of $2.50 a tonne to Singapore spot quotes, while the heavier, more viscous 380-cst grade fell by 30 cents a tonne to $1.03 a tonne to Singapore spot quotes, Reuters data showed.

Despite an easing of the shipping fuel’s flat prices, which is linked to crude values, demand has not picked up significantly, traders said.

“Demand has been so-so, no fireworks at all,” said a Singapore-based trader.

Singapore marine fuel sales in June fell for the second straight month to 3.37 million tonnes, the lowest level in three months.

In other market news, South Korea’s Western Power bought 45,000 tonnes of high sulphur fuel oil for arrival over July 28-August 2 into Pyeongtaek. The cargo was sold by Swiss trader Vitol, but price details were not available.

*SINGAPORE CASH DEALS: Five trades.

Mercuria sold to Vitol 20,000 tonnes of 180-cst for August 11-15 at a discount of $2.50 a tonne to Singapore spot quotes.

Glencore sold to KIB Energy 20,000 tonnes of 180-cst for August 5-9 at a discount of $2 a tonne to Singapore spot quotes over balance July.

Mercuria sold to BP two 20,000-tonne cargoes of 180-cst at a discount of $3 a tonne to Singapore spot quotes. One parcel is for loading over August 11-15, and the other over August 6-10.

PetroChina bought from BP 20,000 tonnes of 380-cst for August 2-6 at a premium of 75 cents a tonne to Singapore spot quotes.

*MARKET NEWS

China’s implied oil demand rose in June to its highest level since January 2013 as crude runs hit a record high, although there were still doubts that the numbers reflected a healthy economy.

Commercial low-sulphur fuel oil stocks in Japan rose 6 percent on week to 1.01 million kilolitres in the week to July 12, data from the Petroleum Association of Japan showed on Wednesday.
Source: Reuters (Reporting by Jane Xie; Editing by Gopakumar Warrier)