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DJ ASIA FUEL OIL: Prices Lower On Crude Losses, Supply Glut
(Comtex Business)SINGAPORE, Dec 27, 2005 (Dow Jones Commodities News via Comtex) --Asia's fuel oil prices were lower Tuesday, pressured by weaker crude futures and a supply glut in the region.
In Singapore's fuel oil swaps market, January swaps for 180 centistoke fuel oil were last quoted at $283.50-$284.00 a metric ton, down from Friday's $286.50-$286.75/ton.
The January-February spread was at a contango of $2.25/ton, largely unchanged from Friday.
Markets in Singapore were closed Monday for a public holiday.
The market is now flush with fuel oil cargoes shipped from the West.
More than 2.5 million tons of fuel oil are scheduled to arrive in Asia in January, little changed from December.
Demand, on the other hand, is unable to keep up with the heavy inflow. Chinese buyers are mostly cautious in their purchase plans for late January to February, mainly due to the current oversupply in the domestic market.
As demand from Chinese end users remained sluggish, many unsold fuel oil cargoes wound up in importers' oil tanks, leading to a continuously increasing inventory level, said a trader based in Guangzhou.
"So now we are considering to cut back on our imports for the next two months," he said.
In tender news, Sri Lanka's Ceylon Petroleum Corp., or Ceypetco, bought 30,000-35,000 tons of 180 cst fuel oil for Jan. 16-17 delivery to Colombo at a $6.39/ton premium over the Singapore mean, said a company official.
The tender was awarded to Middle East trading company Bakri Trading, he said.
Ceypetco last bought a November fuel oil cargo from Vitol at a $15.75/ton premium over the Middle East spot quote.
South Korean utility Korea East-West Power Co., or Kewespo, issued a tender to buy two 72,000-ton cargoes of medium-sulfur fuel oil, a company official said Tuesday.
One cargo is for Jan. 22-26 delivery to Ulsan, while the other is for Feb. 9-13 delivery, he said.
Both cargoes will consist of 540 cst fuel oil with 2.5% sulfur content, he added. The tender will close Thursday.
Kewespo may also buy a cargo of low-sulfur fuel oil in the near future but has yet to fix the volume, the official said.
"The possible volume, I think, is about 60,000 tons," he said.
In the cash market, no deals were done Tuesday. The sole bid was submitted by FAMM, for 380 cst fuel oil at a discount of $2.75/ton to the Singapore mean.
The cash price of 180 cst fuel oil was $281.50/ton Tuesday.
-By Sherry Su, Dow Jones Newswires; 65-64154065; sherry.su@dowjones.com
-Edited by George Bernard
(END) Dow Jones Newswires
12-27-05 0439ET
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