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Asia Fuel Oil - Up; but in deep discount on low demand

Thu Dec 27, 2007 3:39pm IST
 
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SINGAPORE (Reuters) - Asian fuel oil prices rose on Thursday, prompted by aggressive buying seen in futures trade, but the physical cash markets continued to reflect the overall lacklustre demand.

The 180-cst grade rose about $2.45, to an estimated $487.45 a tonne, with no deals concluded during over-the-counter-trade.

The discount for 180-cst fuel oil was broadly unchanged at around $5.63.

China demand for low-metals fuel oil or straight-run product has been decent, with most "teapot" refineries seeking such cargoes from North Asian traders and refiners to crack further into diesel.

"Due to the shortage we have seen a marginal pick-up in demand for this grade of fuel oil which typically comes from the Japanese and Koreans," a Singapore-based trader with a European refiner said.

No early quantifiable data is available but straight-run demand has picked up by about 10 percent from the previous month or about 60,000-70,000 tonnes, traders said.

About 600,000-700,000 tonnes of straight run fuel oil was shipped into China in November.

"I think this is the demand people were talking about, because for blended fuel oil cargoes from Singapore, the demand just hasn't been there," a fuel oil trader with a North Asian trading firm said.

The 380-cst bunkers grade rose nearly $2.50, to about $479.45 a tonne, while the discounts deepened by 35 cents to $4.50.

Singapore fuel oil stocks for the week ended Dec. 26 rose 629,000 barrels to 13.287 million barrels, data released by the Singapore government showed.

India's Hindustan Petroleum sold a 25,000-30,000 tonne January-loading fuel oil cargo to ENOC. Price details were not immediately available.

Construction workers work at a site as the sun sets in Chandigarh in this December 2006 file photo. REUTERS/Ajay Verma
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