SINGAPORE: Singapore fuel oil refining margins against Brent and Dubai crude traded higher on Wednesday, snapping three consecutive sessions of losses.
On Tuesday, discounts of both refining margins were at their widest in nearly five weeks.
REFINING MARGINS
- Industry participants said the refining margins were recovering from oversold territory.
- Expectations of an agreement by OPEC/non-OPEC members to extend production cuts on Thursday also helped boost fuel oil refining margins.
- Fuel oil refining margins have mostly traded well above the above five-year average since the start of 2017 when OPEC first began implementing its production cut agreement which limited supplies heavy crudes that tend to yield larger quantities of fuel oil when compared to light crudes.
- Reuters data showed the June 180-cst fuel oil crack narrowed its discount to Dubai crude to minus $3.23 a barrel from minus $3.96 on Tuesday. On Thursday last week, the refining margin was at its narrowest discount in four months at minus $2.74 a barrel.
- Similarly, the June 180-cst refining margin's discount to Brent crude was at minus $4.61 a barrel, up from minus $5.23 a barrel in the previous session.
SWAPS MARKET
- The ICE-traded 380-cst June/July time spread was also improved on Wednesday, narrowing its discount by 45 cents a tonne from the previous session to minus $1.05 a tonne by 1800 Singapore time (1000 GMT).
- Open Interest (OI) volumes in the 380-cst contract for June continued to set new highs after rising to 11.16 million tonnes, the highest OI for any 380-cst fuel oil futures contract this year.
WINDOW TRADES
- Four cargo trades were reported in the Platts window, totalling 40,000 tonnes of 180-cst fuel oil and another 40,000 tonnes of 380-cst fuel oil.
- A total of 1.6 million tonnes of fuel oil have traded in the window since the start of May, against 3.821 million tonnes in April.
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TENDERS
- Saudi's Samref is offering up to 90,000 tonnes of high-sulphur fuel oil for loading at Yanbu over June 6-10 in a tender closing on May 25.
FUJAIRAH INVENTORIES
- In the United Arab Emirates, the Fujairah Oil Industry Zone (FOIZ) fuel oil inventories were 5 percent lower in the week to May 22 at 9.097 million barrels after falling 513,000 barrels, data via S&P Global Platts showed.
- Fuel oil inventories in the Fujairah hub are now at their lowest since Feb. 20.
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