Asia’s very low sulphur fuel oil (VLSFO) market traded lower on Thursday, though onshore stockpiles at Singapore fell to their lowest in nearly six years, reflecting continued tight supplies for prompt dates.
Inventories of fuel oil have fallen in recent months due to lower incoming supplies to Asia, while firm bunkering demand for high sulphur fuel oil (HSFO) also drove more sales of oil from sellers with cargo availability, according to trade sources.
The recent drop in stockpiles also emerged amid a steadily backwardated market. Singapore’s balance-September/October timespread for VLSFO held above $10 per metric ton this week, based on LSEG data, while the October/November timespread was pegged at $11.75 per ton, fuel oil brokers said on Thursday.
However, expectations of supply replenishment later in October have eased the market recently.
Singapore VLSFO traded at a lower cash premium of $13 per ton, while front-month cracks LFO05SGDUBCMc1 closed largely stable at premiums of $14.90 a barrel.
Meanwhile, HSFO benchmarks gained some strength on Thursday, with cracks for 380-cst HSFO FO380DUBCKMc1 closing higher at discounts of $8.85 a barrel.
INVENTORY DATA
– Singapore onshore fuel oil stockpiles STKRS-SIN were at 15.53 million barrels (about 2.92 million metric tons) in the week to Sept. 25, sliding 16% from the previous week, the lowest since late-October 2018, Enterprise Singapore data showed.
OTHER NEWS
– Oil prices slumped on Thursday, reversing earlier gains, on news Saudi Arabia, the world’s biggest crude exporter, will give up on its price target in preparation for raising output.
– About 29% of crude production and 17% of natural gas output in the U.S. Gulf of Mexico were shut in response to Hurricane Helene, the U.S. Bureau of Safety and Environmental Enforcement said on Wednesday.
– Russia expects “serious” growth potential in global oil demand through to 2050 and is ready to supply additional barrels, its Deputy Energy Minister Pavel said on Thursday.
– Exxon Mobil Corp has proposed a $10 billion investment in offshore oil operations in a new investment push in Nigeria, a presidential spokesperson said on Thursday, citing company executives.
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)