Asia’s cash differential for 380-cst high sulphur fuel oil (HSFO) narrowed to a smaller discount on Wednesday, but bearish factors continue to cap market recovery, industry sources said.
The 380-cst HSFO cash differential firmed slightly to a discount of $0.95 a metric ton, while refining crack climbed to a discount of $14.05 a barrel.
Chinese demand for HSFO is likely to be capped as inventory levels remained high for now, several fuel oil traders said.
Meanwhile, more high-sulphur production and supplies are likely to hit Asia after Russian refineries emerge from seasonal maintenance.
The very-low sulphur fuel oil (VLSFO) market firmed slightly on Wednesday, with market backwardation widening from the previous day.
Singapore’s 0.5% VLSFO cash premium MFO05-SIN-DIF rose to $14.10 a ton, while refining crack LFO05SGDUBCMc1 edged higher to $8.82 a barrel.
The balance-Oct/Nov timespread LFO05FSGSMc0 was pegged at a backwardation of $16.50 a ton, widening from $14.80 a ton the previous day.
In tenders, Sri Lanka’s LIOC sought low-sulphur fuel oil for early November delivery. The tender closes on Wednesday.
FUJAIRAH INVENTORIES FUJAIRAH/
Fuel oil inventories at Fujairah FUJHD04 edged down 2% to 11.45 million barrels (1.80 million tons) in the week to Oct. 9, Fujairah Oil Industry Zone data published by S&P Global Commodity Insights showed.
OTHER NEWS
– Oil edged higher on Wednesday as investors grappled with the prospect of supply disruptions due to the Middle East turmoil.
– China has reaped savings this year of nearly $10 billion through record purchases of oil from countries under Western sanctions, according to Reuters’ calculations based on data from traders and shiptrackers.
– A subsidiary of Hengli Petrochemical, China’s privately controlled refiner and petrochemical producer, has won a licence to supply bonded marine fuel in Zhoushan, the country’s bunker hub, a company spokesperson said on Wednesday.
– Japan’s Tokyo Stock Exchange started trading carbon credits on Wednesday, as the world’s fifth-largest carbon dioxide emitter put in place a key element of its strategy to tackle climate change.
WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters (Reporting by Jeslyn Lerh; bEditing by Kirsten Donovan)