Asia’s spot fuel oil benchmarks steadied on Wednesday after the market’s recent downtrend, while overall trading momentum was largely thin.
Spot premium for very low sulphur fuel oil (VLSFO) inched slightly higher on Wednesday, after slumping to near parity levels to cargo quotes a day ago.
Meanwhile, high sulphur fuel oil (HSFO) was little changed though the risk of downside remained, with backwardation narrowing for the prompt trading months.
“The consecutive stronger (supply) arrivals since October have driven market fundamentals weaker resulting in intermonth spreads compression,” LSEG Oil Research said in an analysis report this week.
Refining margins were mostly rangebound from the previous day. Singapore’s VLSFO crack closed between premiums of $9.50 to $10 per barrel, while 380-cst HSFO cracks were at discounts of $5.50 to 6 per barrel.
INVENTORY DATA
– Fujairah heavy fuel inventories fell 25.0% to 6.42 million barrels (1.01 million tons) in the week to Dec. 9, FOIZ data published by S&P Global Commodity Insights showed.
OTHER NEWS
– Oil prices rose on Wednesday, with market participants expecting demand to rise in China, the world’s largest crude importer, after Beijing announced it would relax monetary policy to try to stimulate economic growth.
– The Kremlin said on Wednesday that reports of a possible tightening of U.S. sanctions on Russian oil suggested the administration of U.S. President Joe Biden wants to leave a difficult legacy for U.S.-Russia relations.
– Global commodities trading house Gunvor intends to mothball the processing units at its Europoort oil refinery in Rotterdam and use the Dutch site as a terminal only, a company spokesperson told Reuters.
– U.S. net crude oil imports are forecast to fall by 20% next year to 1.9 million barrels per day, their lowest since 1971, the Energy Information Administration said, pointing to higher U.S. production and lower refinery demand.
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 Tasim Zahid)