February 8th, 2012, 10:02 AM
MARKET TALK: Asia Fuel Oil: Spreads Narrow Sharply; Litasco Books Rotterdam VLCC
[Dow Jones] Asia fuel oil intermonth spreads narrow sharply as the weeklong selloff resumes; the February/March 180-cst spread narrows to $8.25-$8.50/ton in backwardation, while March/April, which becomes prompt in a week, shrinks to $6.75/ton.
Profit-taking over the past week has weakened sentiment, even though fundamentals remain robust, with China still buying heavily, traders say. A rebound is likely, traders say, and they are seeking fresh buying opportunities. While the decline in Singapore has nearly killed East-West arbitrage economics, Russian trader Litasco, a heavy seller in the Singapore paper market, was heard chartering VLCC Kokkari to ship 270,000 tons of fuel oil from Rotterdam to Singapore at $4.70 million, for loading Feb. 10. Last month Litasco chartered cargoes for Rotterdam-Singapore in what appeared to be a closed arbitrage window because of high freight rates.
Litasco, a key supplier in Rotterdam, has been shipping much of the volume to Asia, and selling little in Europe, traders say.
- Gurdeep Singh, Dow Jones Newswires
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