The cash premium of the benchmark 380-cst fuel oil grade firmed for the fourth straight session on Wednesday, underpinned by lower supply in the region in early April.
The 380-cst cash premium rose 76 percent or close to $1 a tonne to a two-week high of $2.22 a tonne, Reuters data showed. As cash trading begins for early-April loading barrels, tighter supply over
this period has provided some support for the 380-cst market. Around 4.17 million tonnes of fuel oil will arrive in April from the West, of which only an estimated 950,000 tonnes or just 20 percent of the total, will make a landfall in the first 10 days of the month, Reuters reported earlier.
On the other hand, demand from southeast Asia is also set to increase, with Vietnam seeking additional fuel oil for April to May delivery to meet the shortfall of residual products lost when its sole Dung Quat refinery undergoes maintenance over May to July. State-owned Bangladesh Petroleum Corp (BPC) plans to import 67 percent more fuel oil in the April-June quarter from the first quarter to feed demand for power generation as summer approaches, Reuters reported earlier.
"Demand drivers have improved, with (South Asia's) demand up, and requirements into Vietnam should also improve with Dung Quat in turnaround," said a Singapore-based trader. In other market news, Japan's stocks of low sulphur fuel oil climbed 4.3 percent on week to 0.66 million kilolitres, while its refinery run rate was trimmed by 1.9 percentage points to 82.9 percent, latest data from the Petroleum
Association of Japan showed on Wednesday.
CASH DEALS: One 380-cst trade.
Glencore sold to BP 40,000 tonnes of 380-cst for March 29-April 2 at $597.50 a tonne.
Indian Oil Corp (IOC) sold 30,000-35,000 tonnes of 380-cst for March 29-31 loading from Kandla to BP at a discount of $15 a tonne to the IOC formula, 25 percent wider than the February cargo awarded to PetroChina. The Indian refiner separately sold 15,000 tonnes of 380-cst for March 17-19 loading from Haldia to Petronas at a narrower discount of $20-21 a tonne to IOC formula, versus discount of $21-25 a tonne previously for a Feb. 15-17 cargo awarded to PetroSummit. Hindustan Petroleum Corp Ltd sold 25,000-30,000 tonnes of 380-cst for March 26-28 loading from Vizag to Mercuria, at a discount of $20 a tonne to Singapore spot quotes, steady from the refiner's previous sale of a March 1-5 to the same company. The Saudi Aramco-Shell joint venture refinery in Yanbu awarded 80,000 tonnes of fuel oil loading over March 17-21 to Glencore, at an undisclosed price.
Reporting by Jane Xie; Editing by Anand Basu