Cracks for very low sulphur fuel oil (VLSFO) gained on Friday even as spot premiums were largely rangebound, while the market eyed China’s new oil export quotas in a third batch for 2024.

The quotas comprised 8 million metric tons of clean refined fuel and 1 million tons of marine fuel, based on Chinese commodities consultancies and trade sources.
The marine fuel export quota for the third batch was below market expectations of 2 million to 3 million tons, which could mean less domestic supply available for bunkering in China and may lead to more inflows from Singapore.

However, the lower volume was unlikely to have a sustained impact on market prices as China’s bunker sales volumes have dropped so far in 2024 compared with 2023.

Export volume for bunkering totalled 1.46 million tons in August, hitting five-month lows, customs data showed on Friday.

Meanwhile, imports of fuel oil rebounded to three-month highs in August, totalling 1.90 million tons.

A looming tax revamp could have driven some refiners to pick up more barrels ahead of its implementation, while a softer high sulphur fuel oil market in August also spurred buying interest, market sources said.

Refining cracks climbed on Friday, with the October VLSFO/Dubai contract closing higher at premiums above $13.50 per barrel, showed LSEG data.

INVENTORY DATA

– ARA inventories inched down 1.7% to 1.24 million tons in the week to Sept. 19, data from Dutch consultancy Insights Global showed. Weekly inventories averaged lower in September so far, compared to August.

OTHER NEWS

– Oil prices eased on Friday, but were on track to register gains for a second straight week following a large cut in U.S. interest rates and declining global stockpiles.
– China’s crude oil imports from Malaysia surged 31% in August from a year earlier, making it the country’s second-largest supplier after Russia, customs data showed, bucking a broader trend of slowing Chinese imports.
– India has discussed raising oil imports from Brazil in a meeting with the head of the South American nation’s state-run oil giant Petrobras, India’s oil minister said on Friday.
– The shipping unit of Indonesia’s state energy firm Pertamina plans to double its fleet of 320 tankers in the next 10 years, the unit’s CEO Yoki Firnandi told the Gastech conference in Houston.

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; Editing by Shreya Biswas)