Europe Fuel Oil-HSFO up, swaps in backwardation on arb

LONDON, June 18 (Reuters) - European fuel oil prices rose on
Thursday, supported by arbitrage opportunities to export to Asia
due to relatively strong bunker demand in Singapore.

Swaps of high sulphur fuel oil flipped back into
backwardation. In contrast, low sulphur fuel oil swaps remained
in contango due to slow demand from power producers.

PRICES

* Benchmark high sulphur fuel oil (HSFO) barges with 3.5
percent sulphur traded in a range of $377-$381 a tonne fob ARA,
up from $367-$368 on Wednesday.

* Volume was an active 52,000 tonnes.

* The gain in HSFO prices exceeded crude oil and its crack
to dated Brent BFO- was narrowed to $10.90 a barrel from minus
$11.65 on Wednesday.

* Barges of fuel oil with 1 percent sulphur traded at
$377-$380 a tonne fob ARA, compared with $380-$381 a tonne on
Tuesday.

ARBITRAGE

* About 3 million tonnes of fuel oil are expected to flow
from West to East, up from about 2.5-2.7 million tonnes in June.
[ID:nSIN410793]

SWAPS

* HSFO barge swaps flipped back into narrow backwardation.
July was at $379.75/$380.25 a tonne fob and August at
$379.25/$379.75.

* Low sulphur fuel cargo swaps remained in contago. July at
$391.75/$392.75 a tonne cif and August at $395.75/$396.75.

TENDERS

* Traders said Turkey's Tupras had bought about 50,000
tonnes of high sulphur fuel oil for the second half of June in a
tender at the average spot quote minus $5 a tonne. This was not
confirmed.

* It was not clear if Egypt's EGPC has awarded a tender to
buy fuel oil for July.

INVENTORIES

* Fuel oil inventories held at the ARA independent tanks
rose to 631,000 tonnes on Thursday from 580,000 tonnes last
week, Dutch analyst Pieter Kulsen said. [ARA/]
(Reporting by Ikuko Kao, editing by Anthony Barker)