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Asia Fuel Oil Trades at fresh 9-yr high of $157

SINGAPORE: Fuel oil extended its furious bull run on Tuesday as buyers came out in numbers in the face of tight supplies to notch up a new nine-year traded high.

Traders said the deal at $157.00 per tonne, up a dollar from Monday's post-Gulf War traded high, was 50 cents below the best bid for the day.

"The highest bid for the day was at $157.50 but it was for a 30,000-tonne cargo and the seller could only sell 20,000 tonnes so they sold to BP at $157," a trader said.

Traders said as a result of the difference in buying volume, Shell sold the March 15-19 cargo to BP Amoco at $157 per tonne despite Sanko Oil bidding for 30,000 tonnes for similar loading dates at $157.50.

On Monday, Shell sold to Sanko 30,000 tonnes at $156 for March 14-18 lifting.

The day also saw Hong Kong-based terminal operators China Resources Petroleum Co buy 30,000 tonnes for March 26-30 lifting at a $3.25 per tonne premium over Singapore spot prices.

Traders said that Shell could not sell an extra 10,000 tonnes at a higher price was indicative of how tight the market was.

Signs of a supply squeeze were also seen from the results of the Petron tender which was awarded at over $4 per tonne premium to Singapore spot prices on a fob Bataan basis.

The physical price hike was also mirrored in the paper market as players ignored overnight crude losses and looked to the prompt tightness to keep prices up.

March fuel oil swaps were last quoted up $1.50 from Monday at $153.00-$154.00 per tonne but the hike did not filter out to the back months.

As a result the March/April spread widened further to trade at $8 per tonne compared with Monday's $6.50, brokers said.

Traders said the was also benefitting from the current fuel oil rally with the premiums holding at 50 cents over the Pertamina formula. -Reuters