Asia fuel oil swaps rose by 1.0-1.4 percent along their 12-month forward curve on Thursday,while the prompt timespread rose for a third day to its highest level in two weeks, and cracks surged to near two-month highs.? Physical prices also jumped,

and differentials for both the 180-cst and 380-cst grades narrowed
their discounts for a third session.? Traders said a growing belief
that the market was oversold had spurred an improvement in the
product’s timespreads and physical differentials.? But the outlook
remained soft, as abundant supplies continued to outpace relatively
steady marine fuel sales in the region.? Saudi Arabia has sold at least
600,000 tonnes of November-loading spot cargoes so far, after exporting
more than 1 million tonnes in October.? Western arbitrage flows of
around 3.5 million tonnes for November have weighed on the market,
while December inflows are expected to edge higher.? Reflecting the
market’s heavy supplies, Singapore onshore fuel oil inventories surged
2.9 million barrels to a all-time high of nearly 24 million barrels in
the week ended Nov. 25, government data showed.

?* SWAPS TIMESPREADS: The December/January spread for the 180-cst grade
rose for a third session by 63 cents to a contango of $2.00, its
highest in two weeks, while that for the 380-cst grade gained by 75
cents to a contango of $1.00 a tonne.? About 100,000 tonnes of Dec/Jan
180-cst timespread were traded at minus $1.75-$2.40 a tonne by the
close at 0830 GMT, while 80,000 tonnes of the Jan/Feb timespread
changed hands at minus $1.00-$1.25 per tonne.

?* SWAPS OUTRIGHTS: The December and January 180-cst swaps were valued
at $478.25 and $480.25 a tonne respectively by 0830 GMT, up $6.75 and
$6.13 per tonne respectively.? At least 70,000 tonnes of December were
traded at $477.50-$478.00 a tonne by the close. For the 380-cst grade,
activity was thin, with about 15,000 tonnes of December changing hands
at $475.00-$474.75, and 5,000 tonnes of Dec/Jan timespread traded at
minus $1.25 a tonne.

?* SWAPS CRACKS: The front-month December crack narrowed for a third
session by 38 cents to a discount of $4.06 a barrel to Dubai crude, its
highest level in nearly two months. But cracks were still outside the
range of the even-narrower discount of $3.00-$4.00 seen in early
October, reflecting persistent

weakness in the market.

?* CASH DEALS: Two trades done. BP bought one cargo of 380-cst fuel oil for

Dec. 11-15 loading from Hin Leong at $471.00 per tonne, which translates to a

discount of $3.92 to Singapore spot quotes. Shell bought another cargo of

380-cst fuel oil for Dec. 11-15 loading from Hin Leong at $472.00 per tonne,

which translates to a discount of $2.92 to Singapore spot quotes.

?* CARGO PRICES AND DIFFERENTIALS: The 180-cst grade jumped by $7.11 to

$476.50 a tonne, while the 380-cst grade rose by $6.94 to $472.13 a tonne.

?Differentials for both grades improved for a second session, although they

stayed in the red. The discount for 180-cst jumped by 31 cents to minus $1.94 a

tonne to Singapore spot quotes, while that for 380-cst gained by 33 cents to

minus $2.97.

?* TENDERS: India’s Mangalore Refinery and Petrochemicals Ltd (MRPL) has sold

80,000 tonnes of 380-cst fuel oil for Jan. 10-12 lifting to French major Total

at $2.50 per tonne below Singapore spot quotes, on a free-on-board (FOB) basis,

marginally wider than the discount of $2.00-$2.50 a tonne to Singapore spot

quotes, FOB, that Petrosummit paid for a similar cargo lifting on Dec. 9-11.

?Saudi Aramco is offering up to 90,000 tonnes of 380-cst fuel oil for Dec. 4

loading from Jubail via private negotiations, its first December-lifting cargo

after selling three in November.

?* BUNKERS: The Singapore bunker differential, the price spread between

ex-wharf marine fuel prices and fuel oil cargo values, held steady at minus

$1.13 a tonne, with 380-cst bunker fuel at $475-$477.

Source: Reuters

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