Asia’s very low sulphur fuel oil (VLSFO) market firmed on Wednesday following a term tender that closed on Tuesday, with cash premium and backwardation maintaining at strong levels.
Singapore’s cash premium for 0.5% VLSFO rose to $28.33 a metric ton, while refining margin climbed to a premium of $12.48 a barrel.
The balance-month/Dec backwardation spread for 0.5% VLSFO widened back to above $30 a metric ton.
Kuwait’s state-owned refiner had offered VLSFO supplies from its Al Zour refinery for lifting in the first half of 2024, according to market sources. The volume to be lifted ranged from 80,000 to 120,000 tons per month.
“With the tender offer for the January-June supply…it is clear that there is unlikely any spot liftings for December as well,” said Emril Jamil, a senior analyst at LSEG Oil Research.
Cash differentials across key fuel oil grades had eased earlier this week, though the VLSFO market rebounded on Wednesday.
Meanwhile, high sulphur fuel oil (HSFO) remained bearish. Cash differential for 380-cst HSFO dipped to a discount of $1.50 a ton, while refining margin edged higher slightly to a discount of $14.25 a barrel.
FUJAIRAH INVENTORIES
Fuel oil inventories at Fujairah rose 5.1% to five-week highs, hitting 11.59 million barrels (1.82 million tons) in the week to Nov. 6, showed Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.
OTHER NEWS
– Oil prices struggled on Wednesday after sliding to their lowest levels in over three months in the previous session, weighed down by concerns over waning demand in the world’s top oil consumers, the United States and China.
– The U.S. Energy Information Administration raised its 2024 world oil demand growth forecast by 80,000 barrels per day (bpd) to 1.40 million bpd.
– India’s fuel consumption rose to a four-month high in October, government data showed, as increased industrial activity boosted sales during the festive season and the onset of winter in the world’s third-biggest oil consumer.
– BlackRock, the world’s biggest money manager, will invest $550 million in Occidental Petroleum Corp’s direct air capture plant in West Texas, the two companies announced.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: Two trades
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Varun H K)