SINGAPORE (Reuters) - The number of resignations from BP’s Asian fuel oil team has risen to nine, with the departure of four support staff adding to the five traders who had quit, three industry sources said on Thursday.
Five traders on the Asian fuel oil desk quit on Wednesday, including team leader Edmund Lau, which follows the resignation a week ago of the oil major’s Singapore-based global fuel oil trading head, Quek Chin Thean.
The void left by the departures of key traders has removed an 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.
Industry sources also said that BP held a townhall meeting with Singapore staff on Thursday.
When contacted, a BP spokesperson in Singapore declined to comment.
Following the resignations, BP is left with one senior derivatives trader for fuel oil in Singapore.
The reason for the resignations was not immediately clear.
The fuel oil market softened in early trade on Thursday, 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 is saddled with five-year high Western supplies exceeding 4 million tonnes for June.
“Like it or not, they (BP) had been supporting the market and it had been done regularly when they do their bull plays now and then. That support is now no longer there, in the face of ongoing heavy supplies,” a Singapore-based Western trader said.
“There were already signs yesterday when players sold large volumes of flat-price contracts, especially 380-cst. Most were getting out of speculative long positions that were taken when crude first started falling but I’m sure the events at BP contributed to the diminishing confidence in the market.”
Reflecting the weakness, fuel oil’s June crack spread to Dubai crude was valued at a discount of $5.82 a barrel by midday, down 59 cents from a day ago and weakening for a second session.
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.
Before the resignations, BP had been buying 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 been a major player over the past 15 years in Asia’s fuel oil market, regularly trading 500,000-600,000 tonnes of physical cargoes monthly.
It 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