Cash differentials of Asian 380cst fuel oil fell for a fifth consecutive session in active physical trading to fresh multi-week lows despite a sizable drop in onshore stocks of residual fuels in Singapore.
Weekly onshore stocks of Singapore fuel oil fell by 1.941 million barrels (about 290,000 tonnes), or 8.3 percent, to 21.569 million barrels (about 3.22 million tonnes) in the week to April 13, data from International Enterprise (IE) Singapore showed on Thursday.
The large draw "doesn't come as a surprise and doesn't really reflect any changes in supply or demand fundamentals," said one Singapore-based trader. According to the trader, the stock draws over the past two weeks were largely attributable to traded cargoes from the March trading play which are currently being delivered to their buyers.
A total of 5.82 million tonne of fuel oil were traded in the Platts window during March, data from industry sources showed. Over the past two weeks, onshore inventories of Singapore fuel oil fell by total of 3.85 million tonnes, IE data showed.
Although not congested, the busy terminals are impacting the smaller ex-wharf loadings, traders said.
"The busy loading schedules are also leading to logistics issues for ex-wharf loadings," said another Singapore trader.
While the temporary tightness in ex-wharf supplies would typically boost their premiums, the recent sharp increase in fuel oil spot prices have capped the upside potential for ex-wharf premiums for the time being, said the trader.
Ex-wharf premiums were about $2 to $2.50 a tonne on Thursday, sources said.
Eight trades were reported on Thursday totalling 160,000 tonnes of 380cst fuel oil, marking highest traded volumes since March 30.
The 380cst fuel oil cash discounts fell 53 cents from Wednesday to $1.28 a tonne below Singapore quotes, a low since March 3. FO380-SIN-DIF
In paper markets, the soon-to-expire April-May swaps contract and upcoming May-June contracts both narrowed their contango structure by 25 cents each from Wednesday to minus $1.25 a tonne and minus $2.50 a tonne, respectively.
-Oil traders have ramped up their bets in the futures and options market that April's rally will run out of steam, as the outlook for demand weakens and with few clear signs of an end in sight to a supply glut.
-U.S. crude stocks rose last week, soaring more than three times as much as expected, even as gasoline inventories fell more than expected, while distillate stockpiles build, data from the Energy Information Administration showed on Wednesday.
Distillate stockpiles, which include diesel and heating oil, rose by 505,000 barrels, versus expectations for a 281,000-barrel increase, the EIA data showed. In the midwest, distillate stocks rose 471,000 barrels to their highest on record.
-Trading house Mercuria is expanding into structured finance, looking beyond trading physical commodities and derivatives for growth with recent hires from Goldman Sachs GS.N to help in its mission.
"We have built a global platform, now we are looking to build a second floor on top of that platform," Mercuria Chief Executive and co-founder Marco Dunand told Reuters on the sidelines of the FT Commodities Summit.
Source: Hellenic Shipping News