Asia’s high sulphur fuel oil (HSFO) market eased on Wednesday, paring back from a recent rally that sent refining cracks to more than nine-month highs.
Front-month cracks for 380-cst HSFO retreated to discounts of about $5.25 a barrel, down from discounts of $4 in recent sessions, based on LSEG data.
Backwardation spreads for the prompt months also weakened, with 380-cst spreads between June and July narrowing to $15.30 a metric ton, compared with $19.25 on the previous day.
The market has remained robust due to tight supplies, with both refining margins and cash premiums touching more than nine-month highs recently.
Meanwhile, very low sulphur fuel oil dipped on Wednesday, with cash premiums sliding below $3 a ton. Refining margins slipped below premiums of $9 a barrel.
In tenders, Taiwan’s Formosa offered pyrolysis fuel oil for loading in end-June.
INVENTORY DATA
– Fujairah heavy fuel inventories climbed 5.8% to 10.70 million barrels (1.69 million tons) in the week to June 3, extending gains to a six-week high, FOIZ data published by S&P Global Commodity Insights showed Wednesday.
OTHER NEWS
– Oil prices hovered near four-month lows on Wednesday on an expected supply boost later in the year when OPEC+ begins to unwind some output cuts, with markets also digesting U.S. jobs data and higher oil stocks.
– The crude oil tanker market is grappling with an ageing fleet of vessels which need to be replaced, posing a challenge as shipyards are focused on building other types of ships, a top executive with commodity trader Trafigura said on Tuesday.
– Unregulated tankers sidestepping Western sanctions are posing a bigger risk to the Mediterranean region and Greece is undertaking more protective measures to safeguard its coast, the country’s shipping minister told Reuters on Tuesday.
– India plans to set up a new shipping company to expand its fleet by at least 1,000 ships in the next decade as Asia’s third-largest economy seeks a bigger chunk of revenue from surging trade, two government officials said.
Source: Reuters (Reporting by Jeslyn Lerh)