Cash discounts and the front-month time spread contango of Asia’s 380-cst fuel oil weakened over the week to July 22 as suppliers sought to off-load cargoes at more aggressive discounts amid a stubborn growth in fuel oil inventories, traders said.
Despite expectations of constricted fuel oil supplies into Singapore, onshore stocks of Singapore fuel oil STKRS-SIN have been on the rise since the start of the month to a total of 28.239 million barrels (approximately 4.2 million tonnes) in the week to July 20, according to the latest official data.
Still, the drop-off in arbitrage volumes over the past three consecutive months has failed to cause any supply constraints in the Singapore trading hub as there is plenty of fuel stored offshore in tankers.
Cash discounts of the 380-cst fuel oil FO380-SIN-DIF settled at $2.02 a tonne to Singapore quotes on Friday, 42 cents wider than the start of the week but 5 cents narrower from Thursday.
In the swaps market, the 380-cst Aug/Sept time spread widened its contango every
session this week, starting from a 50 cent contango on Monday and settling at minus $1.50
a tonne to Singapore quotes on Friday.
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Source: Reuters
