Backwardation spreads for Asia’s high sulphur fuel oil (HSFO) market widened on Friday as stronger bidding action emerged, trade sources said, while spot premiums also firmed.
The balance-July/August intermonth spread for 380-cst HSFO rose by more than 30% from the previous session to $11 a metric ton at the Asia close (0830 GMT).
The rally was led by firmer bidding activity from a trading house, said sources, with the broader market remaining amply supplied. Refining cracks for 380-cst HSFO continued to cling to discounts of near $6 per barrel.
Meanwhile, spot benchmarks for very low sulphur fuel oil (VLSFO) remained largely rangebound, while margins edged slightly higher to above $11 per barrel.
Demand for VLSFO marine fuel had gathered more pace this week, but bunker premiums were still suppressed on the back of ample supplies, according to trade sources.
INVENTORY DATA
– ARA inventories fell 6.8% to 1.42 million tons in the week to July 4, hitting a 12-week low, data from Dutch consultancy Insights Global showed.
OTHER NEWS
– Oil prices were little changed on Friday, trading near their highest since late April and on track for a fourth straight week of gains, driven by hopes of strong summer fuel demand and some supply concerns.
– Russia’s oil producers Rosneft and Lukoil will sharply cut oil exports from the Black Sea port of Novorossiisk in July, two sources familiar with a loading plan said, as the companies resumed operations at their refineries.
– Nigeria’s debt to gasoline suppliers has surpassed $6 billion – doubling since early April – as state oil firm NNPC struggles to cover the gap between fixed pump prices and international fuel costs, six industry sources said.
– Shell will take an impairment charge of up to $2 billion after the sale of its Singapore refinery and pausing of construction of one of Europe’s largest biofuel plants, it said on Friday.
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 Varun H K)