SINGAPORE: The front-month fuel oil crack and East-West (EW) arbitrage spread firmed on Monday, boosted by a tight near-term supply outlook and limited availability of finished grade bunker fuels, trade sources said.
Arbitrage flows into Singapore are so far expected to total some 4-5 million tonnes in June, with 3-4 of these coming arriving from west of the Suez canal and the remaining 1 million tonnes from the Middle East.
This compares to Singapore fuel oil imports of about 6-7 million tonnes in May.
The June EW spread was trading at about $16 per tonne on Monday, up from about $15.50 in the previous week, broker sources said.
Supported by weaker crude prices, the June 380-cst fuel oil crack to Brent crude narrowed its discount to about $10.60 a barrel on Monday. On Friday the fuel oil crack was trading at about minus $11.45 a barrel, broker sources said.
Oil prices fell on Monday, extending even steeper declines from Friday, as Saudi Arabia and Russia said they may increase supplies and as US production gains show no signs of abating.
Brent and WTI crude prices have fallen by 6 percent and 8.3 percent respectively from peaks touched earlier in May.
WINDOW TRADES
– Four cargo trades were reported in the Singapore trading window, totalling 60,000 tonnes of 380-cst fuel oil and 20,000 tonnes of 180-cst fuel oil.
– Gunvor bought all three 380-cst fuel oil cargoes from Trafigura on Monday at a $3 per tonne premium to the average of June 380-cst quotes.
– Gunvor also sold to Vitol the 180-cst fuel oil cargo at a $3 per tonne premium to Singapore 180-cst quotes.
– The strong buying interest for fuel oil cargoes on Monday helped firm cash premiums of both fuel oil grades.
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TENDERS
– Pakistan’s PSO has received offers for three 65,000-tonne cargoes for June 11-20 delivery into Port Qasim.
– Two of the lowest offers came from Gunvor, one for a premium $18.69 per tonne to Middle East quotes on an FOB basis, and another for a $19.88 per tonne premium. Gunvor’s cargo offers were for loading from Malaysia.
– The third lowest offer came from Bakri at a premium of $23.38 per tonne loading from Fujairah.
– India’s Reliance is offering up to 45,000 tonnes of carbon black feedstock (CBFS) with a maximum 90-cst viscosity and a maximum 1.3 percent sulphur content loading from Sikka on June 17-18.
– Saudi’s Samref is offering up to 90,000 tonnes of 650-cst to 700-cst high-sulphur fuel oil loading from Yanbu on June 5-7.
– Sri Lanka’s Ceypetco is seeking 30,000 tonnes of fuel oil cargoes with a maximum 175-cst viscosity and a maximum 1.8 percent sulphur content for July 8-9 delivery into Colombo in a tender closing on June 5 with three-day validity, the tender documents showed.
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REFINERY OUTAGES
– A minor fire broke out on May 27 on the 50,000 barrel per day (bpd) crude distillation unit (CDU) at Gunvor’s Rotterdam oil refinery in the Netherlands during planned maintenance, a spokesman said.
– The fire was extinguished immediately and there were no injuries.
– Industry monitor Genscape reported that the two CDUs at the refinery were shut down on May 26.
Source: Brecorder
