SINGAPORE: The Singapore 380-cst fuel oil cargo discount narrowed for a second straight session on anticipated tight supply in early January and fewer offers than bids for higher viscosity fuel on the final trading day of 2015.
Although no Singapore cash deals were reported, the 380-cst fuel oil cargo discount to Singapore spot quotes narrowed to minus $0.17 a tonne from minus $1.78 on Wednesday, Reuters data showed.
Benchmark Brent and U.S. WTI fall more than 3 percent after U.S. crude stocks rose unexpectedly last week and on renewed concerns of a global supply glut, data from the
Energy Information Administration showed on Wednesday.
“The spreads are getting crazy,” said a trader based in Singapore.
“They’re getting stronger,” he said, noting this was likely due to participants taking advantage of their last chance to close positions for the month, and year.
Some traders have attributed the recent strengthening in spot prices to a tightness in supply for early January since arbitrage cargo inflows are only expected to arrive towards the end of the month, and in early February.
Demand interest for 380-cst fuel oil was particularly strong at the start of the assessment period with front-curve bids crossing into premium territory, demonstrating stronger demand for the first half of January.
Other traders attributed the marked strengthening in prices to other factors.
“We have plenty oil here,” said a second Singapore trader, “but sellers purposely create this vacuum to push prices higher.”
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