SINGAPORE, Oct 9 (Reuters) - Asia's fuel oil cash differentials recovered onTuesday as low prices helped to stir up buying interest.
Cash differential for 180-centistoke (cst) fuel oil narrowed more than adollar to a discount of 40 cents a tonne above Singapore spot quotes, thehighest in three sessions.
The cash differential represents the amount buyers are willing to pay aboveor below benchmark prices.
Abundant supply of the lower viscosity grade, due to high Western arbitragearrivals, has caused prices to sink, and the prompt October/November inter-monthspread flipped into a contango structure for the first time in seven months.
Western arbitrage inflows for October are expected to increase by 50 percentfrom September to around 5.2 million tonnes, according to a Reuters survey oftraders and shipping brokers.
However, low prices have also encouraged buyers to come forward to makepurchases, with two deals reported done during the physical trading window.Shell sold a 40,000-tonne cargo and another 20,000-tonne parcel at a discount of70-75 cents to Singapore spot quotes.
Demand also emerged from Pakistan, with Pakistan State Oil
issuing a tender to buy 455,000 tonnes of high sulphur fuel oil (HSFO) and110,000 tonnes of low sulphur fuel oil (LSFO) for delivery over November toJanuary. The tender closes on Oct 19, with a one-week validity.
Pakistan uses fuel oil for power generation and consumption usually risestowards the end of year due to heating demand during the winter.
Another South Korean utility has entered the spot market to seek supply.East-West Power issued a tender to buy 50,000 tonnes of HSFO for November. Itlast bought 50,000 tonnes of HSFO for September-delivery from Hyundai at apremium of $4.93 a tonne to Singapore quotes, on a cost-and-freight (CFR) basis.
In the low sulphur fuel oil market, Indonesia's state-owned Pertamina
has concluded its term contract talks with Mitsui, Itochu and Shellto supply low sulphur waxy residue (LSWR) in the fourth quarter, industrysources said.
Premiums were heard to be around $50.00-$55.00 a tonne to Singapore quotes,significantly lower than last quarter's $130.00 a tonne.
- South Korea's East-West Power (EWP) is seeking 50,000 tonnes of HSFO, forNov. 1-5 delivery to Ulsan, via a tender which closes on Oct. 15.
- Pakistan State Oil is seeking seven 65,000-tonne cargoes of HSFO and two55,000-tonne cargoes of LSFO, for delivery over November-January, via a tenderwhich closes on Oct. 19, with offers to remain valid till Oct. 26.
- India's Mangalore Refinery and Petrochemicals Ltd
sold 40,000tonnes of vacuum gasoil (VGO), for Nov. 3-5 lifting from New Mangalore, to Vitolat a premium of $6.00 a tonne above Dubai crude, on a free-on-board (FOB) basis.
* CASH DEALS: Two 180-cst and one 380-cst trades
- Shell sold 20,000 tonnes of 180-cst, for Oct. 24-28 loading, to PetroChinaat a discount of 50 cents a tonne to balance October average quotes, which isequivalent to a discount of 70 cents a tonne to Singapore quotes.
- BP bought 40,000 tonnes of 180-cst, for Oct. 24-28 loading, from Shell ata discount of 75 cents a tonne to Singapore quotes.
- Gunvor sold 40,000 tonnes of 380-cst, for Oct. 27-31 loading, to BP at apremium of 75 cents a tonne above balance October average quotes, which isequivalent to a premium of 80 cents above Singapore quotes.
CASH ($/T) ASIA CLOSE Change % Change Prev RICCloseCargo - 180cst 640.45 1.45 0.23 639.00Diff - 180cst -0.40 1.10 -73.33 -1.50Cargo - 380cst 630.60 0.75 0.12 629.85Diff - 380cst 0.80 1.05 -420.00 -0.25Bunker (Ex-wharf)- 635.00 0.00 0.00 635.00380cstBunker (Ex-wharf) 4.40 -0.75 -14.56 5.15PremiumSWAPS ($/T) ASIA CLOSE Change % Change Prev RIC(0830 GMT) CloseBrent M1 112.54 1.73 1.56 110.81180cst M1 640.50 0.50 0.08 640.00180cst M1/M2 -0.75 0.50 -40.00 -1.25180cst M2 641.25 0.00 0.00 641.25Visco M1 10.63 0.63 6.30 10.00Visco M2 11.50 0.50 4.55 11.00380cst M1 629.88 -0.12 -0.02 630.00380cst M1/M2 0.13 0.38 -152.00 -0.25380cst M2 629.75 -0.50 -0.08 630.25Cracks 180-Dubai M1 -9.69 -1.38 16.61 -8.31Cracks 180-Dubai M2 -9.06 -1.27 16.30 -7.79East-West M1 34.50 0.00 0.00 34.50East-West M2 35.25 0.50 1.44 34.75Barges M1 606.00 0.50 0.08 605.50Barges M1/M2 0.00 1.00 -100.00 -1.00Barges M2 606.00 -0.50 -0.08 606.50Crack Barges-Brent M1 -19.31 -1.81 10.34 -17.50Crack Barges-Brent M2 -18.38 -1.57 9.34 -16.81
(Reporting by Lee Yen Nee; Editing by Alison Birrane)
Keywords: MARKETS ASIA/FUELOIL