High sulfur fuel oil barge backwardation at month low on poor regional demand: traders
Time：2014-09-17
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Traders said regional demand for barges remained weak on low bunker interest while selling has picked up for cargoes.
“There is not much pool from regional barges, and no buying interest from the Mediterranean,” the source said. On the other hand, there are a lot of cargoes on offer, a trader said.
Traders said large volumes continued to leave the ARA region for Asia amid an open arbitrage.
A new VLCC fixture was made by BP for 270 mt for Singapore delivery for October 10 loading, at a lump sum of $4.65 million, traders said.
Meanwhile, HSFO supply remained balanced due to a steady flow of Russian fuel oil despite the ongoing refinery maintenance season in Russia.
“In the Black Sea exports are unfortunately higher at this moment,” one trader said.
While bunker fuel suppliers experienced prompt tightness on HSFO due to logistical issues, the market saw sufficient HSFO supply for forward dates, sources said.
The HSFO derivatives complex followed Monday’s softer physical outlook, with the balance month/October 3.5% FOB Rotterdam barge swap structure declining 50 cents/mt to a $2.50/mt backwardation.
The move saw the structure shallow to the slimmest backwardation seen in September, last lower on August 15, when it reached minus $1.50/mt, Platts data shows.
“The market is a bit weaker. Singapore is weaker as they’re scared of the volumes that are going to land in October… in Europe the market is back to normal — it could go lower if no more VLCC are moving East,” a trader said.