Asia’s very low sulphur fuel oil (VLSFO) markets continued to move down south, with cash differentials extending losses amid lower window offers despite a lack of buying interest and no deals for the fourth session this week.
The March-April spreads on paper narrowed for a fourth straight session this week to $1 per ton as a reflection of prompt market weakness.
Several trade sources remained cautious on the outlook for VLSFO markets, pointing to worries of limited demand and sufficient supplies in March still expected for now.
Onshore fuel oil stockpiles in Singapore averaged at around 18.9 million barrels per week in February so far, down from January’s average of 20.41 million barrels.
Meanwhile for high sulphur fuel oil, front-month paper prices were still being riled up by positive trading sentiment as evidenced from the steeper backwardation between March and April.
As a result, the hi-5 marker (FO05-380SGMc1) continued to narrow and hover at multi-year lows of around $46 per ton.
Cash premiums for 380-cst HSFO (FO380-SIN-DIF) gained to a five-month high of slightly above $16 per ton, with upbeat window buying activity and a lack of offers supporting the market.
The March 380-cst HSFO crack (FO380BRTCKMc1) was at a premium of 30 cents per barrel, while the VLSFO cracks slipped slightly to around $9 per barrel.
INVENTORY DATA
– U.S. crude oil stockpiles fell unexpectedly last week as refining activity ticked higher, while gasoline and distillate inventories posted surprise builds, the Energy Information Administration (EIA) said on Wednesday.
– Singapore onshore fuel oil stockpiles fell for a second week to around a three-month low, data showed on Thursday.
OTHER NEWS
– U.S. President Donald Trump on Wednesday said he was reversing a license given to Chevron CVX to operate in Venezuela by his predecessor more than two years ago, accusing President Nicolas Maduro of not making progress on electoral reforms and migrant returns.
– BP BP. slashed planned investment in renewable energy and said on Wednesday it would increase annual oil and gas spending to $10 billion, in a major strategy shift aimed at boosting earnings and investor confidence.
– Oil loadings from Russia’s western ports in March are set to fall versus February after domestic refineries relaunched after maintenance but other plants hit by drones could spoil these expectations.
WINDOW TRADES
– 180-cst HSFO: No deal
– 380-cst HSFO: No deal
– 0.5% VLSFO: No deal
Source: Reuters