Asia’s hi-5 fuel oil spread was at its widest level in more than four months, data showed on Friday, amid retreating strength in the high sulphur fuel oil (HSFO) market this week.
The hi-5, which captures the premium of very low sulphur fuel oil (VLSFO) over 380-cst HSFO, climbed above $82 a metric ton for the July contract on Friday, LSEG data showed. The spread was last wider in early February.
Spot differentials and backwardation spreads for HSFO have softened this week as prompt supply availability remained high.
Singapore 380-cst HSFO cracks closed at discounts near $2 per barrel, down from about parity to crude quotes last week.
VLSFO also softened this week, though at a milder extent compared to HSFO. Margins for VLSFO (LFO05SGDUBCMc1), (LFO05SGBRTCMc1) held rangebound near $11 a barrel.
Inventories for fuel oil climbed week-on-week at all key storage hubs including Singapore, Fujairah and Rotterdam.
INVENTORY DATA
– ARA fuel oil inventories (STK-FO-ARA) edged 0.6% higher at 1.05 million tons in the week to June 26, based on data from Dutch consultancy Insights Global.
OTHER NEWS
– Oil prices headed for their steepest weekly decline since March 2023 on Friday, as the absence of significant supply disruption from the Iran-Israel conflict saw any risk premium evaporate.
– China’s Iranian oil imports surged in June as shipments accelerated before the recent conflict in the region and demand from independent refineries improved, analysts said.
– Shipping costs for the Gulf have fallen in the past two days, although rates could rebound if tensions increase, shipping and insurance industry sources said on Thursday.
– The U.S. will not complete scheduled deliveries of crude oil into the Strategic Petroleum Reserve until the end of the year due to maintenance, as much as seven months behind schedule, the Department of Energy said on Thursday.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: Two trades
Source: Reuters