DUBAI: Buyers of physical cargoes re-emerged in the Platts window on Monday helping narrow cash discounts of Asia's 380-cst fuel oil, but a prevalence of bearish sentiment in the paper markets weighed on near-dated time spreads of the fuel.
A total of 220,000 tonnes of fuel oil traded in the window on Monday through 11 deals, including 200,000 tonnes of the 380-cst fuel oil and 20,000 tonnes of the 180-cst fuel.
State energy giant PetroChina bought nine of the 10 380-cst cargoes traded in the window, seven of which are slated for delivery at the front of the window between March 21 and 25, industry sources said.
The surge in activity comes after buying interest on Thursday and Friday receded only a day after the supposed start of a widely anticipated bullish trading strategy that would see large volumes of the industrial fuel exchange hands in the pricing window.
"PetroChina came out to support market after two days of silence," a Singapore-based fuel oil trader said.
While PetroChina has already committed to buying 420,000 tonnes of the 380-cst fuel since the start of the play on March 1, some traders were uncertain if Monday's activity marked the restart of the bull trading strategy.
"They aren't pushing hard, their bids are just getting hit...and there's too many sellers," another Singapore trader said.
Cash discounts of the 380-cst fuel were 33 cents a tonne narrower on Monday at minus 52 cents a tonne to Singapore quotes.
In the paper market, the Intercontinental Exchange (ICE) traded 380-cst balance-of-March/April time spread contract slipped to parity by 16:30 Singapore time (0830 GMT) on Monday, down 50 cents from the previous session, sources said.
The 380-cst April/May contract meanwhile remained largely unchanged in a contango of 25 cents a tonne despite expectations of tightening supplies around April.
"Sentiment in paper still bearish," a third trader said.
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