Asia’s key fuel oil market structure weakened on Thursday, with cracks extending losses from the previous close.

The intermonth spread for very-low sulphur fuel oil (VLSFO) fell into a wider contango of $1.50 a metric ton for the balance-month/October contract.

The 380-cst high-sulphur fuel oil (HSFO) spread for the same contract also softened, closing at a narrower backwardation of $1.25 a ton.

Cracks fell for a second straight day. The October crack for VLSFO (LFO05SGBRTCMc1) eased to a premium of about $6.35 a barrel, while the 380-cst HSFO crack (FO380BRTCKMc1) widened to a discount of about $5 a barrel, LSEG data showed.

Trade sources said the market is likely to remain steady to soft for the rest of the year as inventories stay high.

Singapore onshore fuel oil stocks dipped slightly this week but remained above average levels, the latest official data showed.

OTHER NEWS

– Oil prices held steady on Thursday as worries over softening U.S. demand and broad oversupply risks were offset by concerns over attacks in the Middle East and the Russian war in Ukraine.
– World oil supply will rise more rapidly than expected this year as OPEC+ members increase output further and supply from outside the group grows, the International Energy Agency said on Thursday, and implied that a surplus could grow in 2026.
– Indonesian state energy firm PT Pertamina will merge the operations of its refinery, shipping and retail units to improve efficiency in its core business, CEO Simon Aloysius Mantiri said on Thursday.
– Pakistan’s largest refiner Cnergyico expects to boost fuel oil exports by 35% to 40% during the fiscal year ending June 2026 as high taxes have cut into domestic sales, its vice chairman said.

WINDOW TRADES

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