Asia’s benchmarks for very low sulphur fuel oil (VLSFO) logged weekly declines as of Friday, a sign that the market has started to pare back following its recent rally.
Spot premiums for cargo and marine fuel have both weakened. The drop was steeper in the delivered marine fuel market, with premiums softening to levels near $25 per metric ton this week, compared with premiums above $30 last week, based on trade sources.
The market received support in recent weeks on the back of tighter sulphur-cutter stocks and blending components, though prospects of a recovery in broader supply is expected to pare the strength away into the fourth quarter, sources said.
Refining margins have also declined this week, with October cracks for VLSFO closing at premiums of $11.22 on Friday, logging a slide of about 20% week-on-week, based on LSEG’s data.
The VLSFO margin has softened after breaching $14.50 last week, which was a six-month high.
As for high sulphur fuel oil (HSFO), the market has remained largely supported for late-September loadings this week, though showing signs of weakening for October loadings.
INVENTORY DATA
– ARA inventories STK-FO-ARA inched up 1.6% to 1.26 million tons in the week to Sept. 12, data from Dutch consultancy Insights Global showed.
OTHER NEWS
– Oil prices rose on Friday, extending a rally sparked by output disruptions in the U.S. Gulf of Mexico, where Hurricane Francine forced producers to evacuate platforms before it hit the coast of Louisiana.
– About 42% of crude oil production and 53% of natural gas output in the U.S. Gulf of Mexico were shut-in on Thursday in the wake of Hurricane Francine. Meanwhile, six oil refineries in Louisiana in the path of Hurricane Francine began recovering on Thursday from the storm’s passage overnight.
– Experts will this week resume a risky operation to salvage the Sounion tanker that was repeatedly attacked by Yemen’s Houthis in the Red Sea last month and still holds about one million barrels of crude oil, maritime sources said on Thursday.
– Indonesia plans to upgrade the quality of subsidised and polluting fuels, while also selling them to fewer vehicles, in a bid to improve the air quality in the capital Jakarta and other big cities, a senior government official said.
WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Shreya Biswas)