SINGAPORE, Oct 24 (Reuters) - Asia's fuel oil market extended gains on Monday as the
December/January and January/February spreads surged by almost a dollar within a day and the
crack narrowed to a week-high.
Bulls pushed the timespreads up by at least 50 cents a tonne for the first four months of
its 12-month forward curve, with the November/December contract touching an intra-session high
of $10.00 a tonne, before easing back down to $9.50.
Volumes for the first three months' spreads were also significantly heavier, from over
100,000 tonnes for the front-month to close to 200,000 tonnes for January/February.
"There were a variety of players out in the market today, the physical shop guys, the banks,
etc... so it wasn't just one single entity bidding up the market," a broker said.
The prevalent bullish sentiment has largely been supported by fundamentals, with the
physical cash differentials also kept at strong premium levels around $12.00 a tonne to
Singapore spot quotes for both the 180-cst and 380-cst grades.
Supply tightness is expected to last for the rest of the year, due to the lack of
on-specification bunker grade fuel oil amid heavy Western arbitrage inflows.
November's arrivals currently stands at 4.0-4.1 million tonnes, with notional bookings for
December at over one million tonnes so far, while the East-West December spread widens close to
$34.00 a tonne.
Reflecting the market's strong fundamentals, fuel oil's front-month crack narrowed 35 cents
to a discount of $3.69 a barrel, with December Brent LCOc1 edging up 44 cents to $110.06 a
barrel by the Asian close.
SWAPS SPREADS: November/December gained 50 cents to a backwardation of $9.63 a tonne by the
Asian close at 0830 GMT, with bids at $9.00 by 1130 GMT.
At least 115,000 tonnes of November/December were done at $9.50-$10.00, up from 90,000
tonnes previously, while 125,000 tonnes of December/January traded at $7.50-$8.00.
A massive 195,000 tonnes of January/February was also transacted at $6.00-$6.25, while 5,000
tonnes of February/March were done at $5.25, 135,000 tonnes of Q1/Q2 at $14.00-$14.75, and
60,000 tonnes of Q2/Q3 were traded at $11.00-$11.25 a tonne.
Another 20,000 tonnes of November viscosity were done at $7.50, and one lot of 15,000 tonnes
of Q1 at $9.00 a tonne.
SWAPS OUTRIGHTS: The November and December 180-cst swaps were valued at $663.50 and $653.87
a tonne, up $6.00-$6.50, or 0.93-0.99 percent.
At least 60,000 tonnes of November were transacted at $663.50-$663.75 a tonne, down from
105,000 tonnes previously, with bids last seen at $664.50. One lot of 5,000 tonnes of December
were traded at $654.00 a tonne.
The November 380-cst contract was traded at $656.00-$656.25 a tonne for 20,000 tonnes.
For swaps trades, click
EAST-WEST SPREADS: The East-West November spread widened 25 cents to $33.50 a tonne, with
December also edging up 25 cents to $33.00. Only one lot of 5,000 tonnes of November were
transacted at $34.50 a tonne.
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Fuel oil East-West forward curve: here
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SWAPS CRACKS: The November crack discount narrowed 35 cents to $3.69, while the December
contract strengthened 32 cents to a discount of $4.26 a barrel to Dubai crude.
CARGO PRICES AND DIFFERENTIALS: The 180-cst grade climbed $6.50 to $675.75 a tonne, while
the 380-cst grade was $6.70 higher at $668.85. The differential for the 180-cst grade edged up
25 cents to a premium of $11.75, while the 380-cst premium was 75 cents higher at $12.20.
TENDERS: India's Hindustan Petroleum Corp (HPCL) is offering up to 30,000 tonnes of 380-cst,
for Nov. 14-16 lifting from Vizag, via tender which closes on Oct. 25.
CASH DEALS: No deals.
BUNKERS: The Singapore bunker differential, the price spread between ex-wharf marine fuel
prices and fuel oil cargo values, edged up $5.30 to a premium of $18.15, with bunker prices at
$686.00-$688.00, up $12.00.
