Fuel oil refining margins logged a yearly increase in Asia, data from LSEG showed on Friday, though supply pressure is expected to weigh on cracks into 2024.
Margins edged higher this year amid a broader recovery for refined fuels demand across Asia, while a lower crude oil price trend also contributed to higher margins.
Front-month cracks for 0.5% very low sulphur fuel oil (VLSFO) were at premiums of $12.14 a barrel LFO05SGDUBCMc1 on Friday’s Asia close, based on LSEG data, on track for a rise of 47% higher compared to the start of this year.
Cracks for 380-cst high sulphur fuel oil (HSFO) were at discounts of $10.93 a barrel FO380DUBCKMc1, firming 49% versus early January.
However, the market is set to come under pressure in 2024 as Kuwait exports are set to rise, while Russian supplies to China and India will stay elevated, traders and analysts said.
Traders are watching for Kuwait’s Al Zour refinery to reach its full capacity for commercial exports next year, while eyeing the progress of start-ups at the Dangote complex in Nigeria and coker units in Mexico.
ONSHORE INVENTORIES
Singapore: Inventories STKRS-SIN averaged at 20.34 million barrels (3.20 million tonnes) a week in 2023, edging 3% lower compared with 20.94 million barrels (3.30 million tons) a week in 2022, Enterprise Singapore data showed.
Fujairah: Inventories FUJHD04 averaged at 10.30 million barrels (1.62 million tons) a week in 2023, declining 10% from 11.47 million barrels (1.81 million tons) a week in 2022, based on data from the Fujairah Oil Industry Zone.
ARA: Inventories STK-FO-ARA rose by 15% compared to the start of the year, standing at 1.29 million tonnes in the week ended Dec. 28, latest data from Dutch consultancy Insights Global showed.
OTHER NEWS
– Oil prices are set to end 2023 about 10% lower, the first annual decline in two years, after geopolitical concerns, production cuts and global measures to rein in inflation triggered wild fluctuations in prices.
– OPEC is facing weakening demand for its crude in the first half of 2024, just as its global market share declines to the lowest since the Covid-19 pandemic, according to Reuters calculations and data from forecasters.
– Denmark’s Maersk will sail almost all container vessels travelling between Asia and Europe through the Suez Canal from now on, while diverting only a handful around Africa, a Reuters breakdown of the group’s schedule showed.
– U.S. sanctions pose a major obstacle to Russia’s plans to increase exports of seaborne liquefied natural gas to offset the decline in pipeline gas exports to Europe, analysts said, as expectations mount of delays to a flagship project.
Source: Reuters (Reporting by Jeslyn Lerh)