Cash premiums for very low sulphur fuel oil (VLSFO) extended gains in Asia on the first trading day of November, buoyed by expectations of constrained supplies.
The Singapore 0.5% VLSFO cash premium climbed for a fourth straight session to $25.25 a metric ton on Wednesday, scaling a nine-month high.
Market backwardation also surged, with the balance-month/Dec timespread widening to $34.50 a ton at the Asia close, said industry sources.
“LSEG Oil Research believes the low-sulphur fuel oil’s current strength will remain firm through the fourth quarter,” said Emril Jamil, senior analyst for crude and fuel oil at LSEG.
Jamil added that the supply tightness results from a lack of outflows from Kuwait’s Al Zour refinery, amplified by a lack of low-sulfur blendstocks and finished products from the region.
In contrast, cash differentials for both the 180-cst and 380-cst high sulphur fuel oil (HSFO) grades have sunken into discounts.
FUJAIRAH INVENTORIES FUJAIRAH
Fuel oil inventories at Fujairah rebounded 24.6% to 11.02 million barrels (1.74 million tons) in the week to Oct. 30, according to Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.
OTHER NEWS
– Oil prices edged up on Wednesday ahead of key global central bank meetings this week, while the market also watched latest developments in the Israel-Hamas conflict.
– OPEC oil output has risen for a third straight month in October, a Reuters survey found, led by increases in Nigeria and Angola and despite ongoing cuts by Saudi Arabia and other members of the wider OPEC+ alliance to support the market.
– Vietnam’s Nghi Son Refinery and Petrochemical has offered second-half November loading spot diesel cargoes in a rare move, a document on the company’s website showed.
– Shell Pakistan on Wednesday said its parent company’s unit, Shell Petroleum Company, has signed a deal with Wafi Energy to sell the domestic operations.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Eileen Soreng)