[ad_1]
The Singapore high sulfur fuel oil front-month paper crack spread versus the front-month Dubai crude oil swap hit a four-and-a-half-year high Monday, due to recent weakness in international crude prices and tightening HSFO supply, S&P Global Platts data showed.
The front-month December FOB Singapore 180 CST high sulfur fuel oil/Dubai crack swap — which measures the relative value of the product to crude oil — rose 82 cents/b day on day to minus 55.4 cents/b Monday.
The crack was last assessed higher on June 29, 2012, at 4.5 cents/b, Platts data showed.
The front-month FOB Singapore 380 CST HSFO/Dubai crack swap was assessed at minus $1.775/b Monday, up 81.9 cents/b day on day, also a four-and-a-half- year high — last seen when the crack touched minus $1.648/b on June 29, 2012, Platts data showed.
Article continues below…
As at 0645 GMT Tuesday, brokers were pegging the front-month FOB 180 CST HSFO crack swap versus Dubai at around minus 55 cents/b, citing firm buying levels in the outright Singapore fuel oil swaps market.
The HSFO cracks have been strengthening since early October, on the back of volatility in crude prices amid ongoing skepticism regarding OPEC’s much-hyped production freeze agreement.
With OPEC’s official November 30 summit in Vienna barely a day away, the December Dubai swap was assessed at $44.57/b Monday, down 5.17% from $47/b assessed on October 31.
Crude prices might hold back till any further announcement regarding a production freeze agreement is made, market analysts said.
«Oil prices may be choppy until Wednesday. The outcome of the November 30 summit is a binary risk,» Mizuho Bank said in a report.
The strength in fuel oil cracks may, however, be attributable to more than just weaker crude prices, market sources said.
«Crude can swing whichever way but the fact remains that flat prices [for fuel oil] are holding firm,» a Singapore-based broker said Tuesday morning.
Singapore 180 CST HSFO swap was assessed at $279.5/mt Monday, Platts data showed, after dipping to a monthly low of $260.45/mt on November 14.
«It could be a number of factors, including strong fuel oil fundamentals and hedging volume,» said a trader.
Poorer quality Russian fuel oil grades could be reducing the supply of high quality blendstock in the Singapore region, market sources had said the previous week.
«For Far East refiners like us, we are seeing less pure straight runs. The pure M-100 that we see, to blend, is getting heavier in density, and [has] higher viscosity. These factors reduce the supply pool, eventually leading the blending margin to drop,» a refinery trader said.
In Singapore, buying interest for December has been strong as most cargoes arriving from the West have been carrying blendstock components rather than ready-grade bunker fuel material, trade sources said.
–Eesha Muneeb, eesha.muneeb@spglobal.com
–Edited by Geetha Narayanasamy, geetha.narayanasamy@spglobal.com
[ad_2]
Fuente