Asian fuel oil prices hit record highs

Asian fuel oil prices hit record highs on Friday, rising for a third consecutive day on the back of crude's strength, but the market remained weak with both differentials and crack spreads in deep discounts.
Heavy inflows and waning demand have kept the market bearish since the start of July as price-sensitive Chinese buyers are put off by rising prices.
Prices for the benchmark 180-cst grade rose by $11.10 to a record-high of $365.65 a tonne, up from the previous all-time peak of $363.75 on April 24. The 380-cst grade was up $11.05 at $352.60, also an all-time high, with no cash deals done.
Physical differentials for the 180-cst grade improved to a discount of $1.38 a tonne, up 37.5 cents, while the 380-cst differential was steady at minus $2.55.
The product's physical crack value was at minus $15.65 a barrel, up a marginal 10 cents from the previous day, while the front-month August crack swap was at minus $15.65, down 20 cents.
In the cash market, BP continued to support both the 180-cst and 380-cst markets, bidding 30,000 tonnes of both grades, for July 29-August 2 loading, at a discount of $2.00 a tonne to Singapore spot quotes, keeping its bid steady for a second day.
Singapore trader Hin Leong joined BP on the buy side, bidding for 20,000 tonnes for loading on August 9-13 at the same level. The strong bids and the narrowing July/August contango drove the 180-cst differential higher.
The supply outlook remained bearish as July is weighed down by heavy Western arrivals totalling 3.4-3.5 million tonnes, on the back of similarly heavy June inflows. Another 2.0-2.1 million tonnes have been fixed for August arrival, with more expected.
Indian refiners have also sold heavy volumes into East Asia, with July totalling 305,000 tonnes, up more than fourfold from year-ago levels following the latest deal.
Kochi Refineries Ltd (KRL) sold 30,000 tonnes of 380-cst, for July 29- August 2 loading from Cochin, to Middle East trader BB Energy at a discount of $8-$9 a tonne to Middle East spot quotes, on a free-on-board (FOB) basis.
Saudi Aramco offered about 80,000 tonnes of 380-cst for end-July loading from its Sasref refinery in Jubail, FOB, its first offer from the refinery to the spot market this year. Enquiries from Chinese buyers came to a grinding halt in the wake of record-high prices, following heavy purchases for May and June.