Asia’s fuel oil cash premiums were little changed in thin trade on Wednesday, though supply pressure put a lid on the market.
Selling interest continued to emerge for 380-cst high sulphur fuel oil though this met with muted buying interest.
Singapore 380-cst HSFO cash differential was pegged at a discount of $3.90 a metric ton on Tuesday, while cracks FO380DUBCKMc1 eased to discounts of about $11 a barrel.
“HSFO’s weakness has resulted from ample supply due to the sudden availability of Venezuelan cargoes that have been in storage in the Singapore trading hub following the removal of sanctions,” said Emril Jamil, senior analyst at LSEG Oil Research.
The weakness also came from falling demand for refinery feedstocks by China as stocking activities ahead of the Lunar New Year ease, said Jamil.
The very low sulphur fuel oil (VLSFO) market has also eased amid a backdrop of ample inventories, though price declines are limited due to healthy demand for bunker fuels.
The cash differential for 0.5% VLSFO was pegged at a premium of $3.59 a metric ton, while margins LFO05SGDUBCMc1 rose slightly day-on-day to premiums of $12.75 a barrel
Meanwhile, VLSFO bunker premiums at Singapore held near $40 to VLSFO quotes, trade sources said, adding that barging schedules remained tight through the month, with earliest availability at two weeks from the date of inquiry.
BIOFUEL BUNKER UPDATES
Premiums of marine biofuel fell at Singapore in early 2024, weighed by lukewarm demand, lower biofuel feedstock costs and stronger VLSFO benchmarks, sources said.
Spot delivered premiums of B24 traded to as low as around $140 a metric ton over Singapore VLSFO quotes in January, down from between $145 and $170 a ton towards end-2023 and above $200 a ton in Q3 2023.
The price spread narrowed this year after conventional VLSFO bunker prices strengthened, as shipping disruptions in the Red Sea led to firmer demand for VLSFO marine fuel.
Meanwhile, Asia UCOME prices have been capped since Q4 2023 due to slow demand and ample supplies, on top of a soft European market, biofuel traders said.
INVENTORIES
– Fujairah inventories FUJHD04 climbed 7.9% to 9.59 million barrels (1.51 million tons) in the week to Feb. 5, FOIZ data published by S&P Global Commodity Insights showed.
OTHER NEWS
– Oil prices rose on Wednesday after U.S. crude inventories grew less than expected and a cut in the forecast for output growth in the U.S., the world’s biggest producer, eased concerns about potential oversupply.
– Oil loadings from the Novorossiisk Black Sea port and a nearby terminal of the Caspian Pipeline Consortium have been suspended since Feb. 4 because of a storm, two traders familiar with the matter told Reuters.
– TotalEnergies has not sent ships through the southern strait leading to the Red Sea and the Suez canal for several weeks, extending its ships’ travel time to Europe, the French oil major said on Wednesday.
– Australia’s Woodside Energy and Santos said on Wednesday they had ended talks to create a possible A$80 billion ($52 billion) global oil and gas giant, and Santos flagged it would look for other ways to bolster its value.
WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Arun Koyyur)