SINGAPORE: Cash premiums of Asia's benchmark 180-cst fuel oil rose to a 15-month high on Wednesday, boosted by an apparent shortage in supplies and few willing sellers, industry sources said.
While no cash deals were reported for the benchmark 180-cst fuel oil in the Platts window, tight supplies and aggressive offers lifted cash premiums to the highest since June 2015 of $2.01 a tonne to Singapore quotes on Wednesday.
The last time 180-cst premiums were higher was on June 19 at $3.50 a tonne to Singapore quotes during last year's June trading play that saw record volumes of fuel oil exchange hands in a single month.
"The local 180-cst market is pretty small compared to 380-cst fuel with few suppliers," said a Singapore-based trader. "It seems those with supplies are holding on to their cargoes tightly hoping for higher premiums."
In more actively traded 380-cst fuel oil, cash premiums rose 11 cents from their previous session to 69 cents a tonne above Singapore quotes, its highest since Sept 1.
Premiums for the 380-cst fuel were lifted by firm demand for prompt cargoes while Singapore inventories of the fuel were relatively tight, according to industry sources.
The recent steady rise in cash premiums came as onshore inventories of Singapore fuel oil last week slipped to 21.584 million barrels (about 3.22 million tonnes), slightly above their 2016 low of 20.559 million barrels (or 3.07 million tonnes) in the week to Aug. 31, official data showed.
Rising crude prices on Wednesday snapped seven consecutive sessions of gains in Asia's fuel oil crack for the benchmark 180-cst fuel to Dubai crude, slipping 14 cents to minus $3.49 a barrel.
On Tuesday, the front-month discount of the 180-cst fuel oil to Dubai crude had shrunk to $3.22 a barrel, its narrowest since Jan. 26, boosted by supply constraints and lower global inventories.
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