Spot premiums for fuel oil inched further up on Wednesday, while the market expects volatile trading to persist for high sulphur fuel oil (HSFO).
The impact of the latest sanctions was not immediately clear on Russian supply flows, several traders said, with more clarity expected into February.
There will likely be more support for prices and premiums of unsanctioned HSFO barrels, though overall benchmark gains appear capped as inventories in Asia remained high in the near term.
Margins for 380-cst HSFO retreated day-on-day at discounts of about $5.50 per barrel, based on LSEG data for Brent-basis cracks.
Meanwhile, cracks for very low sulphur fuel oil (VLSFO) closed at premiums above $10.40 per barrel.
Backwardation spreads were largely stable for VLSFO at the prompt months on Wednesday, though HSFO spreads widened amid more volatile trading in recent sessions, said market sources.
INVENTORY DATA
– Fujairah heavy fuel inventories (FUJHD04) eased 4.5% to 8.52 million barrels (1.34 million tons) in the week to Jan. 13, based on FOIZ data published by S&P Global Commodity Insights.
OTHER NEWS
– Oil prices rose on Wednesday, trimming losses from the previous day, as the focus turned back to potential supply disruptions from sanctions on Russian tankers, though gains were capped as the market awaited more clarity on their impact.
– Oil shipping rates extended their rally on expectations of a tightening in global tanker supply from wider U.S. sanctions on Russia’s fleet and traders’ demand for ships to load Middle East oil for Asia, industry sources said on Wednesday.
– Colonial Pipeline, the largest U.S. fuel pipeline operator, said that the main artery moving gasoline from the U.S. Gulf Coast to the East Coast has been shut since Monday night due to a potential spill in Paulding County, Georgia.
– A joint venture of Shell and CNOOC plans to expand its petrochemical facility in southern China’s Guangdong province in a project targeted for completion in 2028, it said on Wednesday.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters