Saudi sells 80,000 tonnes cracked fuel oil

Saudi Aramco has sold 80,000 tonnes of cracked 380-centistoke (cst) fuel oil for April 19-21 loading from its Rabigh refinery at a smaller discount than its previous deals, traders said on Tuesday.

Aramco sold the A962 cargo – its third such parcel in the past month, or around six parcels since February – to Japan's Itochu at a discount of around $6 (Dh22) per tonne to Singapore spot quotes, on a free-on-board (FOB) basis, traders said.

This compares with discounts of around $8.00 to $11.00 a tonne transacted for its previous cracked 380-cst cargoes, for loading in March 27-31 and April 18-20, traders said.

Aramco is testing a new thermal cracking unit in its Rabigh refinery, a process that is producing excess amounts of A962, industry sources said last week.

They said France's Total had bought the previous two A962 cargoes for loading on March 20-24 and April 5-7, at discounts of around $8 a tonne, FOB.

Aramco is also offering an unprecedented eighth cargo of straight-run A960 fuel oil over the past month from Ras Tanura, as its hydrocracker, which has been down since early March, is not due to restart until mid-May at the earliest, traders said.

Aramco's eighth A960 parcel is for May 10-12 loading, and comes after having sold seven 80,000-tonne cargoes of the grade for late-March to early-May liftings.

The unusually high volumes of exports from Aramco have caused Asian fuel oil cracks to weaken briefly in the last two sessions, but overall, cracks remain well-supported on expectations of lower Western arbitrage flows in May, as European refiners slash capacity on the back of poor margins.

In particular, the 380-cst market flipped from contango to backwardation on Monday for the first time in over two months.

Traders said many were buying the cargoes now to store them, given ample tank capacity in the region.

But fundamentals in the Asian physical market remain weak. Bunker demand is poor due to falling shipping and trade activities, while buying interest from China, Asia's top fuel oil importer, remains tepid due to hefty stockpiles. 

 

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