Asia Fuel Oil: Spreads Narrow Tad; Sentiment Bullish

Asian fuel oil prompt intermonth spreads narrow slightly from last week but sentiment remains bullish on a tight Singapore bunker fuel market. MRPL's sale last week of a February bunker-grade parcel at record-high levels lifts market sentiment while more arbitrage movement is seen as players look to take advantage of strong premiums in the Singapore market. The arbitrage window has improved from a week ago but traders say it is still challenging for most players in a deeply backwardated Singapore market and due to rising freight costs. Jan/Feb 180-cst paper spread is valued around $14.50/ton in backwardation.

Fuel Oil Arb: Small Vessels Line Up; VLCC Costs Soar

Traders looking for arbitrage opportunities to move fuel oil barrels to Singapore are now focussing on smaller vessels as VLCC freight rates hit record highs; but with high dollar/ton costs and a steeply backwardated Singapore market, arbitrage remains difficult for most players, resulting in several VLCC bookings from ARA region failing in recent weeks. Traders say players with their own barrels, higher-quality product or access to cheaper shipping logistics may be more likely to succeed. Koch was heard to have provisionally chartered Front Odin for $3.95 million to ship 130,000 tons of fuel oil from Rotterdam to Singapore, loading Jan. 22. Vitol provisionally charters similar-sized SKS Segura for $4.1 million for Jan. 17 loading. Vitol has also chartered Coral Sea to ship 80,000 tons from Mediterranean, loading Jan. 28. All the fixtures have yet to be confirmed.

Oil Eyes Europe, But Iran, Nigeria Support -LCG

Oil Eyes Europe, But Iran, Nigeria Support -LCG

Oil market focuses back on the European sovereign debt crisis following S&P downgrade of 9 euro-zone members late Friday, as investors await any potential follow up, says London Capital Group's Glen Ward. But a likely EU Iran oil import ban and instability in Nigeria are keeping prices propped up for now. "[These are] serious enough reasons for the energy sector's participants to remain on alert, thinking twice about massive sales," he adds. Nymex resistance seen at $100.19/bbl, then $100.77. Brent resistance seen at $112.50, then $114.01. At 0847 GMT, Nymex February crude was up 53c at $99.23/bbl, ICE March Brent up 92c at $111.27/bbl.

Goldman Positive On Oil Services; Upgrades Aker

Goldman Sachs remains positive on the medium-term outlook for the oil services sector, underpinned by high oil-price forecasts and the need to replace and grow reserves in increasingly more complex and expensive developments. It upgrades Aker Solutions (AKSO.OS) to buy from neutral, following significant underperformance. It also upgrades AMEC (AMEC.LN) to buy from neutral given its attractive relative valuation. It upgrades Prosafe (PRS.OS) to neutral from sell to reflect a more positive outlook for dry rates and utilization. However, Goldman downgrades John Wood Group (WG.LN) to neutral from buy, following its strong recent performance.

Oil Futures Rise But Euro Weakness Exerts Pressure

U.S. benchmark crude-oil futures remained below $100.00/bbl in early Asian trade, in line with a weaker euro after Standard & Poor's lowered its ratings on nine euro-zone nations Friday. Investors had mostly priced in the downgrades by the close of floor trading in New York Friday. Meanwhile, the potential for reduced global oil supplies from the Persian Gulf and Nigeria is keeping a floor on prices. "Investors reportedly didn't want to get caught out shorting the market ahead of [the] long [Martin Luther King holiday] weekend in the U.S.," ANZ Research said in a note. Traders said trading volumes on Nymex will likely be thin ahead of the U.S. holiday Monday, when floor trade will be suspended. Nymex crude for February delivery is up 13 cents at $98.83, while March ICE Brent crude, the new benchmark, is up 42 cents at $110.77/bbl

Indian Oil Raises Jet Fuel Prices By 2.9%

Indian Oil Raises Jet Fuel Prices By 2.9%

State-run Indian Oil Corp. (530965.BY) has raised jet fuel prices by 2.9% effective Monday, a company official said.
Jet fuel will cost INR64,882 per kiloliter at Delhi airport for the fortnight beginning Jan 16, compared with INR63,077 a kiloliter in the previous fortnight, the executive, who didn't wish to be named said.
Indian fuel retailers revise jet fuel prices every fortnight, in line with international rates.