Asia Fuel Oil-380-cst premium up slightly; stocks near 5-month low

Cash premium on the 380-cst fuel oil rose slightly on Thursday as the market prices in tighter supply in August and lower onshore stocks.

The 380-cst cash premium rose for the second straight session to $1.75 a tonne to Singapore
spot quotes, up 15 cents from Wednesday, Reuters data showed.

More than half of the fuel oil supplies into Singapore, Asia’s oil trading hub, come from
the West, including the United States, the Caribbean, and Europe.

Also known as arbitrage supply, Asia will receive just 2.7 million tonnes of fuel oil, the
lowest since February and down 10 percent from July, Reuters analysis of shipping data showed.

Lower flat prices have also propped up demand from the shipping sector, which uses the
380-cst fuel oil to power vessels.

The 380-cst marine fuel grade loaded from Singapore oil terminals, also known as ex-wharf, averaged $600.94 a tonne to date in July, 1.6 percent lower than the June average of $610.76 a tonne.

Singapore onshore fuel oil stocks tanked 4.442 million barrels (670,000 tonnes), or 20
percent, to a near five-month low of 18.292 million barrels (2.88 million tonnes), data from
trade agency IE Singapore showed on Thursday.

Japan’s refinery run rates rose 4.2 percentage points to 80.6 percent in the week to July
19, data from the Petroleum Association of Japan showed on Thursday.

Commercial inventories of low-sulphur fuel oil were down 4 percent at 0.96 million
kilolitres, PAJ data showed.

*SINGAPORE CASH DEALS: One trade.

Glencore sold to Socar Trading 36,000 tonnes of 180-cst for August 8-12 at $598 a tonne.

*MARKET NEWS

Europe is coming under increasing pressure to close oil refineries as chronic overcapacity
hits processing margins, dragging down group profits and hitting share prices.

Despite the closure of 13 European refineries over the last five years with the loss of 1.8
million barrels per day (bpd), or about 12 percent of capacity, Europe still has far too much
processing equipment, undermining margins at even the most sophisticated plants.
Source: Reuters (Reporting by Jane Xie; Editing by Subhranshu Sahu)