MRPL sells June fuel oil; lowest since Dec ‘08

MRPL sells June fuel oil; lowest since Dec ‘08

Singapore: Mangalore Refinery & Petrochemicals Ltd (MRPL) sold 80,000 tonnes of June-loading fuel oil at its steepest discount in more than a year, damped by a heavily supplied East Asian market, traders said on Monday.

The 380-centistoke (cst) parcel, for 4-6 June loading from New Mangalore, was sold via tender to Japan’s PetroDiamond at a discount of $7.00-$8.00 a tonne to Singapore spot quotes, on a free-on-board (FOB) basis. This was the lowest price level since it sold a cargo that loaded in December, 2008, at minus $9.00.

“The weak price level is not a surprise but, at a flat-price level, it’s not that cheap," a Singapore-based Asian trader said.

“The strike price also reflects the market’s bearish mood, despite the recent improvement in the timespreads."

He added that while the market has improved, most players do not think it has strengthened by much over a short time and most traders are still quite cautious. Traders attributed much of fuel oil’s recent strength to short-term pricing interests.

MRPL last sold three parcels, for March to May loading, to Vitol at discounts of $2.30 a tonne to Singapore spot quotes, FOB.

The fuel oil market has since been weakened by heavy inflows for two consecutive months, March and April, with six-month high volumes of Western arbitrage cargoes, totalling 3.7-3.8 million tonnes, flowing into East Asia this month.

The lower and more balanced May supplies in terms of fuel quality, at 2.7-2.8 million tonnes, have lifted sentiment in the past week, strengthening fuel oil’s prompt May/June timespread to a contango of $2.00-$2.25 a tonne, up from minus $3.88 just over a week ago.