Falling crude boosts Asia refining margins, spreads steady
DUBAI (Reuters) -- Asia's refining margin for 180-cst fuel oil against Dubai crude rose to a 5-week high on Tuesday, after crude oil prices slipped on expectations of rising US shale oil output in May.
Singapore's May 180-cst fuel oil discount to Dubai crude narrowed for a second consecutive session on Tuesday, narrowing 22 cents a barrel from the previous session to minus $3.72 a barrel.
Oil prices hit their lowest in 11 days on Tuesday on news that US shale oil output in May is expected to post the biggest monthly rise in more than two years, fueling concerns that US production growth is undermining efforts to cut oversupply.
Total fuel oil flows into East Asia for April are expected to close unexpectedly higher at 6.5 MMt to 7.0 MMt, lifted by unusually strong arrivals from the Middle East and Asia, assessments by Thomson Reuters Oil Research showed.
This comes despite below average Western inflows at under 4 MMt, just under the first-quarter average of 7.1 million to 7.2 MMt.
Despite expectations of elevated arbitrage arrivals, the May East-West (EW) arbitrage spread—the price difference between FOB Singapore 180-cst high-sulfur fuel oil and FOB Rotterdam barge fuel oil with maximum 3.5% sulfur—widened to a 5-week high of $23 a ton.
Liquidity in the ICE traded 380-cst time spreads returned after remaining depressed over the previous two sessions by 1730 Singapore time (0930 GMT) on Tuesday.
Trading more than 200,000 tonnes in contracts, the front month 380-cst May/June spread contract narrowed its discount by 20 cents per tonne from the previous session, to a 30 cents a tonne contango.
By contrast, the July/Aug and Aug/Sept 380-cst time spread contracts slipped on Tuesday.
Eleven cargo trades were reported in the Platts window on Tuesday totaling 220,000 t of 380-cst fuel oil.
PetroChina was again the top buyer of 380-cst fuel oil, lifting 7 of Tuesday's traded cargoes. Mercuria followed with another three cargoes and Hin Leong with one.
A total of 2.54 MMt of 380-cst fuel oil have traded in the window since the start of April.
Window trades were initially concluded at narrow discounts on Tuesday but bidding quickly intensified, helping nudge 380-cst cash premiums FO380-SIN-DIF 1 cent a tonne higher from the previous session to $1.08 a tonne to Singapore quotes.
The UAE's ADNOC is offering up to 340,000 t of straight-run fuel oil for delivery in June through four 85,000-tonne cargoes loading at Ruwais in a tender closing on April 20.
Reporting by Roslan Khasawneh; Editing by Edmund Blair
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