Asia Fuel Oil-Prices fall; cracks, timespreads firm

SINGAPORE, Sept 2 (Reuters) - Asia fuel oil prices eased for
the third straight session on Wednesday, but cracks and
timespreads jumped, buoyed by robust bunker demand in Asia and
the Middle East, and expectations of shrinking supplies ahead.

Fundamentals are well supported by tighter supplies for the
rest of the year due to global refinery run cuts, and healthy
demand from the Singapore bunkers market, fuel oil's largest
outlet in Asia.

Demand from Singapore, the world's top bunker port, remains
steady, buoyed by improving shipping activity and its
competitive rates vis-a-vis regional ports.

So far, monthly bunker sales have averaged above 3 million
tonnes, compared with last year's average of 2.91 million
tonnes.

"Bunker demand at the start of this month has been steady,
and cargo demand is so strong that it is pushing up bunker
premiums -- premiums are around $5-$7 now, compared with about
$3-$5 last week," said a regional bunker trader.

The Middle East's top bunkering port of Fujairah, with fewer
exports from Iran, has also been drawing supplies away from
Indian refiners at high prices, the latest being a 60,000-tonne
lot from MRPL at a year-high premium of $1.00 above spot quotes.

"Middle East demand is strong and supplies are really tight,
because Iranian exports are down, and Pakistan has been buying a
lot," said a fuel oil trader with a European firm.

Pakistan's oil requirements for its power sector are
expected to rise 29 percent by year-end as new oil-burning
plants come online to overcome the country's severe electricity
shortage. The country imports about 80 percent of its oil.

Further reinforcing the tight supply, Western arbitrage
inflow in October is expected to fall from the last two months.
Around 1.8-1.9 million tonnes have been fixed for arrival so
far, and this is expected to rise to 2.4-2.5 million tonnes.

In comparison, about 3.8-3.9 million tonnes were fixed for
this month and 3.4-3.5 million tonnes fixed for August.

* CARGO PRICES: The 180-cst grade eased for the third
straight session to $427.31 from $436.74 per tonne, while the
380-cst grade also fell to $424.69 from $435.16 a tonne.

But the premium for 180-cst rose for the seventh straight
session to $3.00 a tonne from $2.50, while that for bunker grade
fuel eased to $2.85 a tonne from $3.19.

The price spread between the 180-cst and 380-cst grades --
or the viscosity spread -- rose to $2.62 a tonne from around
$1.60 a tonne.

* CASH DEALS: Unipec sold 20,000 tonnes of 380-cst fuel oil
for Sep 17-21 lifting to Hin Leong at $424 per tonne. This is
the second day in a row that Unipec, trading arm of China's
Sinopec has made a 380-cst offer during the window pricing
period. It is usually more active in crude trades.

* CRACKS: Cracks firmed further to minus $2.14 a barrel from
minus $2.85 a barrel.

* SWAP SPREADS: Timespreads along the front half of the
forward curve strengthened on buoyant sentiment. The
September/October 180-cst backwardation widened to $3.25 from
$2.38 a tonne, while the 380-cst backwardation rose to $4.00
from $3.38 a tonne. <ASIA/SWAP/FUEL>
SPOT LSWR LSWR-SIN 65.00/65.50 65.25 0.00
SPOT FO 180 CST FO180-SIN 427.11/427.51 436.74 -9.43
SPOT FO 380 CST FO380-SIN 424.49/424.89 435.16 -10.47
SEP FO SWAPS <OILSWAP/SG> 425.00/425.50 434.88 -9.63
OCT FO SWAPS <OILSWAP/SG> 421.75/422.25 432.50 -10.50
SINGAPORE BUNKER BK380-B-SIN 429.00/431.00 440.00 -10.00
(Reporting by Jennifer Tan, Editing by Peter Blackburn)