Asia’s spot differential for high sulphur fuel oil (HSFO) sank into a discount on Tuesday, while the prompt market structure flipped from backwardation into contango amid bearish market conditions.

Supply inflows are expected to remain plentiful into July, trade sources said, while demand for bunker fuel has not seen much uptick.

Singapore’s 380-cst HSFO cash differential was pegged at a discount wider than $2 a metric ton on Tuesday, with the product trading into an even steeper discount of $4 for prompt loading dates in mid-July.

The hi-5 marker, which captures the premium of very low sulphur fuel oil (VLSFO) over 380-cst HSFO, continued to widen amid the weaker HSFO market and a largely rangebound VLSFO market.

The spread for July rose day-on-day at above $83 a metric ton on Tuesday, based on LSEG data.

OTHER NEWS

– Oil prices were steady on Tuesday as investors assessed expectations that OPEC+ will announce an output hike for August at an upcoming meeting as well as trade negotiations.

– Saudi Arabia, the world’s biggest oil exporter, may raise its August crude oil prices for buyers in Asia to the highest in four months, after spot prices surged during the Iran-Israel conflict and on robust summer fuel demand, trade sources said.

– Britain’s Lindsey oil refinery has begun insolvency proceedings, putting hundreds of jobs at risk and potentially increasing the country’s reliance on fuel imports just weeks after its Grangemouth refinery stopped processing oil.

– Chevron will close its Aberdeen, Scotland, office, the U.S. oil producer said on Monday, ending the company’s decades-long presence in the city as part of its ongoing restructuring.

WINDOW TRADES

– 180-cst HSFO: No trade
– 380-cst HSFO: One trade
– 0.5% VLSFO: No trade
Source: Reuters