Asia Fuel Oil-India exports resume after 2-mth halt

SINGAPORE, May 7 (Reuters) - Indian Oil Corp (IOC) is offering 380-cst fuel oil for June lifting, after selling a mid-May cargo, while Essar Oil sold two May parcels, marking the resumption of India's exports of residual fuels after a two-month hiatus.

Traders said Indian refineries were resuming fuel oil sales, in line with the start of the monsoon season between May and July. Exports had halted since late March, as refineries cut runs and switched to production of bitumen to meet rising demand from domestic infrastructure projects.

IOC is offering via tender 30,000 tonnes of 380-cst grade for June 1-4 loading from Chennai, after selling a cargo for May 15-18 lifting to BB Energy at a discount of $6 a tonne to the IOC formula, on a free-on-board (FOB) basis, traders said on Thursday.

This is a narrower discount compared to previous deals. The state-run firm last sold two 30,000-tonne cargoes for early and late March loading to BP and Trafigura at a discount of $10-$10.50 per tonne to the IOC formula, FOB.

Essar Oil has also sold two 60,000-tonne cargoes of 180-cst fuel oil for loading on May 17-21 and May 30-June 3 from Vadinar to FAL Oil.

FAL paid a discount of around $6-$7 per tonne to Singapore spot quotes, FOB, for both cargoes, or a premium of $2-$3 per tonne to Middle East spot quotes.

The price is higher than the last deal, when the refinery sold a similar parcel for late-March loading to Kuo Oil at a discount of $14 per tonne to Singapore spot quotes, FOB.

"The monsoon period is starting, so exports are up again -- during the monsoon, there is a big drop in electricity usage from utilities and factories because it's cooler and there are a lot of floods," said a Singapore-based Western fuel oil trader.

India is resuming exports at a time when fundamentals in the Asian fuel oil market are strengthening.

Cracks jumped to near 2-½ month highs at the start of the week in active trade, in anticipation of tighter supplies.

Fewer Western arbitrage cargoes are expected to land in Asia in May and June, as European refiners slash capacity, while the peak summer demand season in the Middle East is expected to draw barrels away from Asia for domestic power generation. (Reporting by Jennifer Tan; Editing by Ramthan Hussain)