Asia's fuel oil market strengthened further on Tuesday, with cash premiums for the 380-centistoke (cst) grade climbing to its highest in three months.
There were no physical trades done, but Brightoil and BP's bidding pushed the 380-cst premium to Singapore spot quotes up by 55 cents to $5.75 a tonne.
The 180-cst cash premium also extended its gains to a new three-month high of $5.70 a tonne, up 50 cents from the previous session.
Brightoil continued to be active in the swaps market, picking up 100,000 tonnes of the 135,000 tonnes of June 380-cst fixed-price contract done. The contract closed $4.50 higher at $645.25 a tonne.
Traders expected current market strength, caused mainly by Brightoil and BP's bull play, to come off, as the market remained amply supplied.
Indian refiners Mangalore Refinery and Petrochemicals Ltd (MRPL) and Hindustan Petroleum Corp (HPCL) came forward to offer up to 110,000 tonnes of 380-cst for June-delivery, while Saudi Aramco is offering 90,000 tonnes of the A991 grade.
Higher volumes of Western arbitrages cargoes are also due to arrive in Asia next month, a trader said.
Demand from the bunker market as well as China remained sluggish, though a Barclays note said that current lower fuel oil prices may bouy demand from Chinese teapot refineries.
Source: Reuters