Asia’s fuel oil markets continued to see a flurry of spot activity in the trading window on Friday amid higher cash premiums, though the November-December swaps backwardation reflected cautious expectations among traders.
Prompt 380-cst market fundamentals could still be supported by ongoing demand from the bunker and feedstock markets amid low stockpiles in the West, two trade sources said.
Kuwait’s recent sales tender for an early Nov 380-cst cargo was done at premiums of almost $40 a ton, one of the sources added.
However, some traders said the situation might ease by the second-half November as some shipments are likely due soon.
Refining margins for 380-cst slipped to a two-week low discount of around $6 a barrel as the November-December backwardation in the swaps market widened again.
Meanwhile, for very low sulphur fuel oil (VLSFO) markets, traders were still eyeing rising supplies for November.
The availability of bunker deliveries for VLSFO at Singapore ports remains higher than for 380-cst, with a one-week delivery lag between the two grades, a third source said.
The December Hi-5 spread widened to slightly above $123 per metric ton, a one week high, as a reflection of the backwardated market for both grades of fuel oil.
In tenders, India’s HPCL offered five 330-360cst cargoes for loading between end-November and early February, closing on Nov. 5.
INVENTORY DATA
– Fuel oil stocks independently held in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub stayed at nine-month lows in the week to Thursday, data from Dutch consultancy Insights Global showed.
– Top oil exporter Saudi Arabia may cut prices for most of the crude grades it sells to Asia in December tracking weakness in Middle East benchmark Dubai, trade sources said.
– Oil prices extended gains on Friday, climbing more than $1 a barrel to pare weekly losses, after reports Iran was preparing a retaliatory strike on Israel from Iraq in the coming days.
– Rosneft ROSN.MM will resume operations at its oil refinery at the Black Sea port of Tuapse in November, three industry sources told Reuters.
– Freight rates for tankers carrying Russia’s flagship Urals crude from its Baltic ports to India have stalled on expectations of lower oil exports from Moscow’s western ports in November, trading and shipping sources said.
Source: Reuters (Reporting by Trixie Yap; editing by Jason Neely)
