Europe Fuel Oil-Barge prices fall, crack strengthens

LONDON, July 2 (Reuters) - Fuel oil prices fell on Thursday
but the loss was limited compared with crude oil by strong
demand from Asia.

The high-sulphur grade's crack spread rose relative to dated
Brent to levels not seen since mid May.

A sharp drop in fuel oil inventories in ARA also supported
prices.

PRICES

* Benchmark high sulphur fuel oil (HSFO) barges with 3.5
percent sulphur traded in a range of $376-$377 a tonne fob ARA,
down by about $10 from the previous close.

* Liquidity was fairly low with around 22,000 tonnes traded
in the cash market.

* Fuel oil strengthened relative to crude and the crack
spread to dated Brent BFO- narrowed by more than $1 to minus
$6.43 a barrel, the narrowest since mid May.

* Brent crude futures LCOc1 were trading $2.11 lower at
$66.68 a barrel by 1707 GMT.

INVENTORIES

* Fuel oil stocks held in independent ARA tanks fell by 25
percent to 418,000 tonnes in the week ending July 2, Dutch oil
analyst Patrik Kulsen said. [ID:nL2707669] [ARA/]

* Stocks were considerably lower than the same week last
year when they were at 685,000 tonnes.

SWAPS

* HSFO barge swaps remained in narrow backwardation. The
balance of July was $371.75 a tonne and August at $370.75.

* Losses in higher sulphur materials were dwarfed by those
in lower grades and high-low spreads fell to around $5 for July
from $10 on Wednesday.

* "Demand from richer countries using more low sulphur
grades has decreased more than the poor countries using more of
the 3.5 percent grade," a trader said.

* But spreads were wider further out and the lighter grade
for September was trading $10 above the matching HSFO contract.

REFINERY RESTARTS

* Spanish oil and gas firm Repsol (REP.MC: Quote, Profile, Research) temporarily
restarted its 100,000 barrel-per-day Cartagena refinery on
Thursday after a shutdown since April due to weak margins, a
company spokesman said. [REF/OUT]

(Reporting by Emma Farge; editing by Ikuko Kao/James Jukwey)