The cash premium for very low sulphur fuel oil (VLSFO) rebounded in Asia on Wednesday despite a spot tender from Kuwait’s Al Zour refinery issued late Tuesday.
The refinery offered 130,000 metric tons of VLSFO for loading between Feb. 8 and 9 in a tender that closes on Wednesday noon Kuwait time, trade sources said.
Expectations of higher spot fuel oil supplies from Kuwait have capped price and margin recovery in the Asia market this year.
That said, the market has seen some recent support emerging from prospects of higher marine bunker demand following ship diversions in the Red Sea.
The Singapore VLSFO cash premium rose to $8 a ton on Wednesday, while margin inched higher to a premium of $12.87 a barrel.
However, an ample supply pool limited the extent of price gains, with strong flows of arbitrage and regional flows seen this month.
In recent tenders, Thailand’s PTT has also offered 35 tons of VLSFO for loading between Feb. 18 and 20. The tender closes on Wednesday.
Meanwhile, high-sulphur fuel oil (HSFO) eased on Wednesday, with the front-month market structure widening in contango.
The 380-cst HSFO cash premium was pegged lower at $3.25 a ton, while margin FO380DUBCKMc1 slipped to a discount of $13.70 a barrel.
INVENTORIES
Fujairah fuel oil inventories fell 3.0% to 9.11 million barrels (1.43 million tons) in the week to Jan. 22, FOIZ data published by S&P Global Commodity Insights showed.
OTHER NEWS
– Oil was little changed on Wednesday as traders weighed the impact on prices stemming from escalating geopolitical tensions, concerns over tepid demand and a stronger dollar.
– Russian energy company Novatek resumed fuel loadings on Wednesday at its Baltic Sea Ust-Luga terminal, damaged in a suspected drone attack, according to industry sources and LSEG data.
– U.S. oil refiners have asked President Joe Biden’s administration to reform the renewable fuel credit program by restricting who can participate, claiming the current trading environment allows market manipulation and raises fuel costs.
– Woodside Energy CEO Meg O’Neill said on Wednesday that there was no recent precedent for sizable premiums in oil and gas deals. The producer reported it was still in the early stages of talks over a potential $52 billion merger with Santos.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: Three trades
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Tasim Zahid)