Refining margins for fuel oil held largely rangebound despite a sharp fall in crude prices on Tuesday, with gains capped by prospects of supply replenishment.
The market is eyeing more incoming cargoes, with total fuel oil arrivals at Asia expected to breach 7 million tons this month, ship-tracking data from LSEG showed on Tuesday.
The recovery is led by higher inflows from the Middle East, with more Iraqi barrels to land in Asia this month. Meanwhile, western arbitrage barrels also trekked higher amid more incoming supplies from Russia and the U.S., the data showed.
Refining cracks for very low sulphur fuel oil (VLSFO) for November closed at premiums of about $13.60 a barrel on Tuesday, while 380-cst high sulphur fuel oil (HSFO) closed at discounts of about $6.35 a barrel.
Meanwhile, spot premiums for VLSFO continued to inch higher, though HSFO premiums were steady.
REFINERY UPDATES
– Ampol, Australia’s top fuel retailer, said on Tuesday it would undertake further maintenance at its Lytton refinery next month after the company reported a sharp drop in third-quarter output, sending its shares to a 21-month low.
– U.S. oil refiners are expected to have about 1.04 million barrels per day of capacity offline in the week ending Oct. 18, raising available refining capacity by 40,000 bpd, research company IIR Energy said.
– A prominent Houston law firm said it plans to file a lawsuit later this week against Mexican national oil company Pemex seeking $50 million in damages for a deadly hydrogen sulfide gas release on Thursday that killed two workers.
OTHER NEWS
– Oil prices slid as much as $3 on Tuesday on the back of a weaker demand outlook and after a media report said Israel is willing not to strike Iranian oil targets, which eased fears of a supply disruption.
– Russia has available facilities to increase its crude oil production by around 700,000 barrels per day, according to a report published by the International Energy Agency (IEA) on Tuesday.
– French oil major TotalEnergies expects its third-quarter downstream results to sharply decrease due to a 65% drop in refining margins in Europe and elsewhere, the company said on Tuesday amid a drop in global oil prices.
– Brazil’s Petrobras is discussing a partnership with Vale to help the mining company lower carbon emissions, the state-run oil firm’s Chief Executive Magda Chambriard said.
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Shailesh Kuber)