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Asia Fuel Oil-Slips on crude, cash support strong

SINGAPORE: Asian fuel oil prices took a beating on Friday as market confidence finally caved in in the face of an imminent rise in global crude production and unexpected news of fresh prompt and arbitrage product supplies.

Traders said the market was unnerved by the emergence of numerous sellers as it became apparent that prices were on their way down.

"Suddenly you have all these offers coming out when only two days ago people were not so keen to sell at $200 (per tonne). I think everyone knew that the supply squeeze was over today," a trader said.

In the cash market, local trader Sanko Oil bought one 20,000 tonne cargo each from Cosco-Feoso and Glencore at $184 for March 25-29 lifting, down from the $195 it paid on Thursday.

Traders said there was a general consensus that the supply situation had improved significantly from about one to two weeks ago as soaring prices induced refiners to squeeze out several prompt cargoes.

They said Thai refiners had sold two medium-ranged cargoes this week for loading over the weekend at premiums of about $1.75 per tonne on a free-on-board Rayong and Sri Racha basis.

Traders said at least two more similar-sized cargoes were being offered by the refiners for loading in the second half of March.

The price spike, shooting up by over $40 since the beginning of this month, had also forced Chinese customers to turn away one or two cargoes they had bought earlier from traders.

These cargoes had ended up in the Singapore spot market, thus easing the supply crunch.

Traders said the supply situation would improve significantly in the second half of next month as several arbitrage cargoes from the Americas and Europe begin to hit the region.

An estimated five cargoes would be shipped out of the Americas with at least two to three seen leaving Europe for Singapore, traders said.-Reuters