Asia’s spot market for high sulphur fuel oil (HSFO) eased for a second session on Friday after an earlier rally died down, though refining margin strengthened after Saudi Arabia announced further supply cuts.

Saudi Arabia will extend a voluntary oil output cut of one million barrels per day for another month to include September, it said, adding it could be extended beyond that or deepened.

Crude supply cuts by Saudi Arabia usually have a bullish impact on the HSFO market, as the output cuts are typically on heavy crude grades that produce more fuel oil in refining.

Cash differential for 380-cst HSFO fell to a premium of $28.15 a metric ton, but front-month refining margin closed higher at a discount of $5.62 a barrel.

Meanwhile, the very-low sulphur fuel oil (VLSFO) spot market continued to soften, with the 0.5% VLSFO cash differential MFO05-SIN-DIF easing to a premium of $2.75 a metric ton.

Front-month margin for 0.5% VLSFO rose to a premium of $11.70 a barrel.

ARA INVENTORIES

Inventories at ARA fell 6% to 1.25 million tons in the week to Aug. 3, latest data from Dutch consultancy Insights Global showed.

OTHER NEWS

– Oil prices were on track for a sixth week of gains after Saudi Arabia and Russia, the world’s second and third-largest crude producers, pledged to cut output through September.

– Russia will cut oil exports by 300,000 barrels per day in September, Deputy Prime Minister Alexander Novak said.

– Brazilian national oil company Petrobras posted a nearly 36% drop in its second-quarter profits, citing falling crude prices, although earnings surpassed analyst expectations.

– Shipping group A.P. Moller-Maersk warned on Friday of a steeper decline in global demand for shipping containers by sea this year, prompted by muted economic growth and customers reducing inventories.
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Shilpi Majumdar)