Asia Fuel Oil-Arbitrage spread steady but fails to boost new fixtures

The November East-West spread was little changed on Wednesday, keeping the arbitrage window for shipping fuel oil into East Asia open, industry sources said. Despite the “workable” arbitrage window, sources said the number of new bookings for November or December arrival were limited. Meanwhile, fuel oil inventories in the Fujairah oil hub fell to a near eight-month low in the week to Oct. 9, official data showed.

Fujairah Oil Industry Zone (FOIZ) fuel oil inventories fell 782,000 barrel (or about 117,000 tonnes) to 8.503 million barrels (1.27 million tonnes) in the week to Oct. 9, data via S&P Global Platts showed.

Sources attributed the weekly drop to fewer fuel oil imports from Iran, as well as firm exports to destinations in the region and Singapore.

Fuel oil flows from the Middle East into East Asia are expected to hit a record high of over 2 million tonnes in October, assessments by Thomson Reuters Oil Research showed on Tuesday.

Fujairah fuel oil inventories are now at their lowest since Feb. 20, and are at their third lowest level since records began in January.

On average, weekly fuel oil inventories in Fujairah stand at 10.55 million barrels (or 1.57 million tonnes) since January.

Kuwait’s KPC sold up to 80,000 tonnes of 380-cst high-sulphur fuel oil to Litasco for loading from both Mina al-Ahmadi and Mina Abdulla ports on Oct. 20-21 at an unknown price level, sources said.

A shipbroker report shows Litasco provisionally chartering the Al Mahfoza aframax vessel to load 80,000 tonnes of fuel oil from Kuwait on Oct. 20-21.

KPC also issued its fifth offer to export fuel oil since the closure of its Shuaibah refinery at the start of April.

KPC’s latest offer totals up to 88,000 tonnes in two fuel oil grades loading on Oct. 13-14 from both its Mina al-Ahmadi and Mina Abdulla ports in an offer that closed on Tuesday with next day validity. –

The offer consists of 45,000 to 50,000 tonnes of heavy 380-cst fuel oil with a maximum 4.2 sulphur content, along with 25,000 to 38,000 tonnes of heavy 380-cst fuel oil with a maximum 3.5 sulphur content.

Four 20,000 tonne cargoes trades were reported in the Platts window, totalling 20,000 tonnes of 180-cst fuel oil and another 60,000 tonnes of 380-cst fuel oil.

India has reduced the goods and service tax (GST) on marine fuels, known as bunker fuel, to 5 percent for all vessels, the government said on Wednesday, which should help the country’s fuel sellers compete with other lower-tax ports in Asia.

“This would provide limited relief to the bunker fuel sellers that had seen their market shifting to Colombo,” a trade source said. Like Asian bunkering hubs in Singapore and Fujairah, Sri Lanka levies no taxes on bunker fuel oil.
Source: Reuters (Reporting by Roslan Khasawneh; Editing by David Evans)