World News
Record Trade Volume in June Anticipated for Asia's Fuel Oil Market
Asia's fuel oil market is set to see a record volume of physical trades in June based on open interest in derivatives for the oil product, Reuters reports.
Traders told the agency that fuel oil trades of the 380 centistoke grade for June could easily top 3 million tonnes for deals done on the price assessment process run by Platts.
They added that the volumes could nearly double the 1.75 million tonnes of 380 cSt traded on the Platts Market-On-Close (MOC) process for May, which were already more than five times the average monthly trade volumes over January to April.
The biggest buyers on Platts' MOC process over the past month were said to have been Glencore and BP and the biggest sellers Lukoil and Gunvor.
It's unclear how the large volumes of trades expected this month will impact prices.
Reuters notes that supportive factors include rising marine fuel demand and increased summer demand for power generation in Saudi Arabia, which could limit the kingdom's fuel oil exports.
However, Singapore fuel oil stocks have surged to more than a five-year high and could pressure prices.
Expectations for a record month of cargo trades were sparked as open interest for June 380 cSt fuel oil derivatives reached a combined 12.8 million tonnes on May 27, according to Intercontinental Exchange and Chicago Mercantile Exchange data.
"Three to four million tonnes should be the number we are looking at (for physical 380 cSt trades)," said a Singapore-based fuel oil trader.
But if bunker industry experts are correct, all the excitement revolving around 380 cSt trading may soon be a thing of the past.
Earlier this year Dr Rudy Kassinger told delegates at the recent Connecticut Maritime Association Shipping 2015 event that the upcoming 0.50 percent global sulfur cap on marine fuel will be a key driving force behind IFO380 being replaced by 500 cSt product as the world's most popular grade of residual bunker fuel.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 655.50 | 2.00 | 808.50 | 4.50 |
| Rotterdam | 619.00 | 0.00 | 789.00 | 8.00 |
| Houston | 628.50 | 7.50 | 812.50 | 1.50 |
| Fujairah | 653.50 | 4.50 | 900.00 | 2.50 |
| Global 20 Ports Average | 672.00 | 0.50 | 885.00 | 7.00 |
| Global 4 Ports Average | 639.00 | 2.50 | 827.50 | 2.00 |
| Global Average Bunker Price | 727.50 | 1.50 | 933.50 | 5.00 |
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