Winter demand narrows Asian fuel oil spread across months

On December 27, the spread of the Asian fuel oil price in recent months was the narrowest in the two trading days. Industry sources said that the winter demand of power plants will provide some support to the market.

Reuters data showed that the January/February positive spread narrowed by $0.38 to $3.63 per ton.

The spot price spread also rose slightly, despite thin trading. The 180-cst fuel oil price spread is a two-day high, with a discount of $3 per ton from the Singapore spot price.

According to Reuters estimates, the 380-cst fuel oil price spread narrowed by US$0.15, which was a discount of US$0.75 per ton from the Singapore spot price, which was also the highest in two trading days.

Japanese and South Korean utility companies’ winter demand pulled down Singapore stocks. According to Singapore International Business Development Bureau (IES) data, Singapore's onshore fuel oil inventories fell for the third consecutive week, dropping to 19.465 million barrels in the week of December 20.

Nippon Oil Association figures show that in the week of December 22, Japanese Class C low-grade fuel oil inventories increased to 770,000 kiloliters.

East-West Power of South Korea bought a total of 100,000 barrels of high* fuel oil delivered from Mercuria in January, and cost-plus-freight (C&F) per metric ton of water from Singapore's spot price increased by $1.88.

Reuters estimates that in January, the spread of fuel oil cracking price was under pressure due to rising crude oil prices, which increased by 0.24 U.S. dollars to 10.26 U.S. dollars per tonne compared with Dubai crude oil.