Asia’s very low sulphur fuel oil (VLSFO) market held on to its recent strength on Friday, though some benchmarks showed signs of cooling off.
Singapore cash premium remained firm for prompt loading dates, with the product trading higher at $25 per metric ton to Singapore quotes, though offers retreated for loading dates into late September and early October.
Backwardation also eased at the prompt months. The balance-September and October timespread contracted to $27.50 per ton on Friday, after hitting $30.50 per ton the day before.
Bunker premiums in the delivered Singapore market also softened this week after hitting more than six-month highs last week. The premiums fell below $35 per ton this week, compared with levels near $40 last week, based on trade sources.
Refining margins for VLSFO also eased into the week. The October crack spread to Dubai breached $14.50 per barrel at the Asia close the previous day, but closed lower at $14.03 per barrel on Friday, based on LSEG data.
Amid the recent strength, margins for VLSFO have remained relatively stronger compared to other parts of the barrel such as gasoline and gasoil, which have been dragged lower by higher supplies after peak summer travel demand ended.
INVENTORY DATA
– ARA inventories STK-FO-ARA fell 8.3% to 1.24 million tons in the week to Sept. 5, after holding largely stable for three weeks, data from Dutch consultancy Insights Global showed.
OTHER NEWS
– Oil prices ticked up on Friday, with investors exercising caution ahead of key U.S. employment data as they weighed a big withdrawal from U.S. crude inventories and a delay to production hikes by OPEC+ producers.
– OPEC+ agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding that it could further pause or reverse the hikes if needed
– Asian refiners’ margins slumped to their lowest seasonal levels since 2020 this week as supplies of diesel and gasoline rose after peak summer travel demand ended, industry officials and analysts said on Friday.
– A liquefied natural gas tanker managed by an Indian company that came under U.S. sanctions last month for aiding Russia’s war against Ukraine has berthed at the Arctic LNG 2 plant in Russia on Friday, shiptracking data showed.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters