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Asia Fuel Oil-Oct/Nov flips into contango; at near 2-year low

SINGAPORE, Oct 5 (Reuters) - Asia's fuel oil market plunged further on Monday, with the prompt inter-month spread sinking to its lowest in nearly two years amid abundant supply of the 180-centistoke (cst) fuel oil.

The balance October/November contract dipped $1.75 to a contango of $1.25 a tonne, according to Reuters data.

A contango price structure is when prompt prices are weaker than forward prices. This is the first time the prompt contract has flipped into negative territory in seven months, Reuters data showed.

Asia is due to receive around 5 million tonnes of Western fuel oil this month, of which most of the cargoes consist of the lower viscosity grade. "In terms of supply, we certainly see more than last month, but this is as much of a demand issue too," a trader said.

The prompt viscosity spread, which represents the balance of blendstock in the market, fell to a three-month low of $10.00 a tonne by the Asian close on lower 180-cst prices.

The weakness in the market could see some upside when utilities and refiners start stockpiling for the winter.

Sri Lankan refiner Ceylon Petroleum Corp has emerged in the spot market to seek 20,000 tonnes of high sulphur fuel oil (HSFO) and 20,000 tonnes of low sulphur fuel oil (LSFO).

South Korean utility Western Power (WP) has also issued a tender to buy 30,000 tonnes of HSFO for November delivery. The utility has bought two 30,000-tonne parcels for August and September from Mitsui at a premium of $32.00-$33.00 a tonne.

* TENDERS:

- Sri Lanka's Ceylon Petroleum Corp (Ceypetco) is seeking 20,000 tonnes of high sulphur fuel oil (HSFO) and 20,000 tonnes of low sulphur fuel oil (LSFO), for Oct 27 delivery, via tender which closes on Oct 16, with a 72-hour validity.

- South Korea's Western Power (WP) is seeking 30,000 tonnes of high sulphur fuel oil, for Nov. 3-7 delivery to Pyongtaek, via tender which closes on Oct. 15.

- India's Mangalore Refinery and Petrochemicals Ltd

is offering 80,000 tonnes of 380-cst, for Nov. 9-11 lifting from New Mangalore, via tender which closes on Oct. 11, with a one-day validity.

- India's Bharat Petroleum Corp Ltd

sold 30,000 tonnes of 380-cst, for Oct 23-27 lifting from Kochi, to Marubeni at a discount of $17.00-$18.00 a tonne to Singapore spot quotes, on a free-on-board (FOB) basis.

- Indian Oil Corp

sold 30,000-35,000 tonnes of 380-cst, for Oct. 23-25 loading from Chennai, to BP at a discount of $5.00-$10.00 a tonne to the IOC formula, which is the average of Platts and Argus' assessment.

* CASH DEALS: No trades CASH ($/T) ASIA CLOSE Change % Change Prev RIC Close Cargo - 180cst 629.85 -27.45 -4.18 657.30 Diff - 180cst -1.50 -1.00 200.00 -0.50 Cargo - 380cst 639.00 -8.60 -1.33 647.60 Diff - 380cst -0.25 -1.10 -129.41 0.85 Bunker (Ex-wharf)- 635.00 -17.00 -2.61 652.00 380cst Bunker (Ex-wharf) -4.00 -8.40 -190.91 4.40 Premium SWAPS ($/T) ASIA CLOSE Change % Change Prev RIC (0830 GMT) Close Brent M1 110.81 -1.35 -1.20 112.16 180cst M1 640.00 -18.00 -2.74 658.00 180cst M1/M2 -1.25 -1.75 -350.00 0.50 180cst M2 641.25 -16.25 -2.47 657.50 Visco M1 10.00 -0.75 -6.98 10.75 Visco M2 11.00 -0.75 -6.38 11.75 380cst M1 630.00 -17.25 -2.67 647.25 380cst M1/M2 -0.25 -1.75 -116.67 1.50 380cst M2 630.25 -15.50 -2.40 645.75 Cracks 180-Dubai M1 -8.31 -1.07 14.78 -7.24 Cracks 180-Dubai M2 -7.79 -1.01 14.90 -6.78 East-West M1 34.50 -2.50 -6.76 37.00 East-West M2 34.75 -2.25 -6.08 37.00 Barges M1 605.50 -15.50 -2.50 621.00 Barges M1/M2 -1.00 -1.50 -300.00 0.50 Barges M2 606.50 -14.00 -2.26 620.50 Crack Barges-Brent M1 -17.50 -0.80 4.79 -16.70 Crack Barges-Brent M2 -16.81 -0.74 4.60 -16.07

(Reporting by Lee Yen Nee; Editing by William Hardy)

((lee.yennee@thomsonreuters.com)(+65 6870 3823)(Reuters Messaging: lee.yennee.thomsonreuters.com@reuters.net))

Keywords: MARKETS ASIA/FUELOIL