Three BP fuel oil traders in U.S. quit

SINGAPORE Mon May 31, 2010 6:48am EDT

A British Petroleum (BP) sign is seen at a petrol station in south London July 29, 2008. REUTERS/Dylan Martinez

A British Petroleum (BP) sign is seen at a petrol station in south London July 29, 2008.

Credit: Reuters/Dylan Martinez

SINGAPORE (Reuters) - Resignations from BP Plc's (BP.L) fuel oil team have extended globally, with the departure of three traders from its U.S. office, including the team leader, and the head trader in London, three industry sources said on Monday.

These take the total number of departures from the unit to 14 worldwide, after Reuters reported that five fuel oil traders in Singapore and four support staff quit last Wednesday, following the resignation of global fuel oil head Quek Chin Thean a week before that.

When contacted, a BP spokeswoman in Singapore declined to comment. The reason for the resignations was not immediately clear.

The fuel oil traders in the United States and London resigned over the past three to four weeks, the sources said.

"Most of BP's fuel oil team, including the global head and the heads of the three trading centers, have left in the past month," a U.S.-based source said.

BP has been a major player over the past 15 years in the fuel oil market. In Asia, it regularly trades 500,000-600,000 tonnes of physical cargoes monthly.

The departures in the U.S. of fuel oil leader, Tim Gawne, another physical trader and the third who traded derivatives, left the team with one derivatives trader, the sources said.

Its European fuel oil team head, Chris Paine, left about a month ago, but the six other traders remain on the desk. Paine, who has been its London-based team leader for about two years, was BP's youngest book leader when he was appointed to the position at the age of 28, sources said.

The void left by the departures of key traders globally, including Asia team leader Edmund Lau, has removed important support for the fundamentally weak Asian fuel oil market, where BP had been engaged in a bull trading play for the past two months for the May and June contracts, traders said.

In the immediate aftermath of the resignations of its Asia fuel oil team, BP's marine fuels division in Singapore has not offered spot ex-wharf bunkers on Wednesday and Thursday. But it has since resumed offers of bunkers on Monday, traders said.

The fuel oil market remained weak by midday Monday, with traders attributing this to the recovery of crude oil prices after a recent slide and a lack of confidence in the residual fuel market, which has been saddled with heavy supplies for five months up till July.

Reflecting the weakness, fuel oil's June crack spread to Dubai crude was valued at a discount of $6.68 a barrel by midday, down 24 cents from a day ago and the lowest since May 6.

The weakness in its timespreads extended further down the 12-month forward curve, with June/July to January/February at a contango of $3.00 a tonne or weaker for a third session.

Before the resignations, BP bought large volumes of 180-centistoke (cst) grade fuel oil for the June contract for a two-week period, amid sliding global crude oil benchmarks.

The major picked up at least 30,000-40,000 tonnes daily, in what traders say is a bull-trading play on the product's crack spreads to Dubai crude, and bought as much as 100,000-150,000 tonnes on some days, Reuters data show.

BP has combined storage capacity of about 600,000 cubic meters in the Universal and Tankstore oil terminals in Singapore and for the past three years has been the top supplier of marine fuels in the city state, the world's top bunker port by volume, with 400,000-500,000 tonnes a month.

(Editing by Ramthan Hussain)