The front-month East-West (EW) arbitrage spread sank to a near two-week low on Friday making fresh arbitrage supplies into Asia less economical. This came as the July 380-cst barge spread in northwest Europe rallied amid narrowing supplies in the Amsterdam-Rotterdam-Antwerp (ARA) oil hub as vessels there prepared to load Singapore-bound fuel oil cargoes.
ARA INVENTORIES – Fuel oil stocks in independent storage in the ARA hub fell 16 percent in the past week on strong export demand to Asia, data from Dutch consultancy PJK International showed. – PJK data showed two VLCCs were ready for loading part cargoes at Rotterdam to go to Singapore. – In Singapore, onshore fuel oil inventories rose to a 7-week high of 3.48 million tonnes in the week to June 21, up 8 percent or 168,000 tonnes from the previous week, official data released on Thursday showed. – Despite a 60 percent drop in weekly net imports, the inventory rise in Singapore came after at least one VLCC storing fuel oil – the Humanity – discharged her cargo adding as much as 300,000 tonnes to onshore inventories.
SWAPS MARKET – The ICE-traded June 380-cst EW arbitrage spreads sank to $14 a tonne by 3:30 p.m. Singapore time (0730 GMT) on Friday, down from $15.25 a tonne in the previous session. – This came as the Rotterdam 380-cst July/Aug barge spread rallied to a premium of about $3.75 a tonne, up from $2.50 a tonne on Thursday. – Given the current level of the July EW spread, traders said fresh arbitrage supplies from northwest Europe into Asia would be limited as shipments of the fuel would be uneconomical. – Industry sources estimated July arrivals into Singapore at around 3.5 million tonnes to 4 million tonnes so far.
WINDOW TRADES – Two cargo trades reported in the Platts window, totalling 40,000 tonnes of 380-cst fuel oil. – A total of 1.12 million tonnes of fuel oil have traded in the window since the start of June, against 1.94 million tonnes in May.
TENDERS – Venezuela’s oil company PDVSA is seeking to buy up to 6.32 million barrels of fuel in one of its largest offers on the open market in recent years, according to documents seen by Reuters on Thursday. – Among others, PDVSA is seeking up to seven 500,000-barrel cargoes of vacuum gasoil (VGO) from July through December.
ASSESSMENTS FUEL OIL CASH ($/T) ASIA CLOSE Change % Change Prev RIC Close Cargo – 180cst 286.10 2.69 0.95 283.41 Diff – 180cst 1.85 0.25 15.63 1.60 Cargo – 380cst 280.33 2.69 0.97 277.64 Diff – 380cst 1.93 -0.16 -7.66 2.09 Bunker (Ex-wharf)- 380cst 284.75 2.00 0.71 282.75 Bunker (Ex-wharf) Premium 4.42 -0.69 -13.50 5.11 For a list of derivatives prices, including margins, please double click the RICs below. Brent M1 180cst M1 180cst M1/M2 180cst M2 Visco M1 Visco M2 380cst M1 380cst M1/M2 380cst M2 Cracks 180-Dubai M1 Cracks 180-Dubai M2 East-West M1 East-West M2 Barges M1 Barges M1/M2 Barges M2 Crack Barges-Brent M1 Crack Barges-Brent M2
Source: Reuters ( Editing by Biju Dwarakanath)