SINGAPORE, Nov 18 (Reuters) – Asia’s benchmark 180-cst fuel oil complex strengthened on Friday after a wave of high viscosity fuel oil arriving in Singapore stoked concerns of cutter stock availability, industry sources said.
“There’s lots of high-vis fuel around which needs to be blended,” said a Singapore-based fuel oil trader adding that cutter stocks, including the 180-cst fuel oil, were in relatively narrow supplies.
The December visco-spread rose 50 cents a tonne on Friday to $8.50 a tonne. The front month visco spread was last as high on Nov. 1 when initial concerns of tight cutter supplies sent it to 15-month high.
The backwardated structure of the 180-cst fuel also widened on Friday as the Dec/Nov time spreads for the benchmark fuel rose 75 cents to 3.75 a tonne above Singapore quotes. The last time the front month time spread of the lower viscosity fuel were as high was in the midst of the so-called June bull-play in 2015.
Fuel oil stocks independently held in the Amsterdam-Rotterdam-Antwerp (ARA) hub soared 84 percent, or 537,000 tonnes, to a total of 1.174 million tonnes in week to Nov. 17, its highest levels in six months, data from Dutch consultancy PJK International showed.
However, last week’s ARA stock build was more a result of logistical technicalities says PJK’s Patrick Kulsen.
“The stock build comes just as a couple of VLCCs were readying to load fuel oil cargoes bound for Singapore,” Kulsen said, adding that rising water levels along the Rhine helped European refiners send a backlog of barges carrying the fuel to ARA storage tanks.
The build in ARA stocks follows Thursday’s sharp increase in Singapore inventories which rose 15 percent, or 475,000 tonnes, to a six-week high in the week to Nov. 16.
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