Asia’s hi-5 fuel oil spread widened for the fourth consecutive trading session on Tuesday, with 380-cst high sulphur fuel oil (HSFO) benchmarks softening in recent sessions, while 0.5% very low sulphur fuel oil (VLSFO) benchmarks gained strength.
The October hi-5 spread, which is the price premium of VLSFO over 380-cst HSFO, closed above $159 a metric ton, based on LSEG data on Tuesday. The spread affects scrubber and bunkering economics.
The HSFO market has shown signs of weakening on expectations of softer import demand from China into the fourth quarter. The market backwardation for 380-cst HSFO has also weakened in recent sessions, while cash premiums came under mild pressure.
In contrast, the VLSFO market has held stable to firmer as supply tightness continued for prompt loading dates.
Refining cracks for both grades also trended in opposite directions. October VLSFO/Dubai cracks breached premiums of $15 a barrel on Tuesday, while 380-cst HSFO closed lower day-on-day at discounts of about $8.70 a barrel.
OTHER NEWS
– Oil prices rose on Tuesday on news of monetary stimulus from top importer China and concerns that conflict in the Middle East could hit regional supply, while another hurricane threatened supply in the United States.
– U.S. oil producers were scrambling to evacuate staff from Gulf of Mexico oil production platforms as the second major hurricane in two weeks was predicted to tear through offshore oil producing fields.
– Russian energy company Novatek launched the new processing unit at its gas condensate complex at the Baltic Sea port of Ust-Luga in the last third of the August, two market sources told Reuters.
– The U.S. Federal Trade Commission is expected to greenlight oil producer Chevron’s purchase of Hess as soon as this week, two people familiar with the matter said, leaving Exxon Mobil’s challenge to the $53 billion deal as its final hurdle.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Shailesh Kuber)