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Asia Fuel Oil-Cash premiums steady, market backwardation widens

Cash premiums for fuel oil were steady in Asia on Wednesday, though market backwardation widened from the previous session.

The premium for very low sulphur fuel oil (VLSFO) held near an eight-month high, closing at $19.58 a metric ton, while refining crack was at $10.49 a barrel at the Asia close.

VLSFO stays supported amid lower-than-expected exports out of Kuwait’s Al Zour, with total October exports sliding from September, shipping data showed.

Market backwardation firmed, with the Nov/Dec timespread widening to $18.25 a ton at the Asia close, compared with $16.75 a ton the previous day, showed LSEG data.

Meanwhile, the high sulphur fuel oil (HSFO) premium has been inching slightly higher in recent sessions, as bids and offers rose.

The 380-cst cash premium FO380-SIN-DIF climbed to $3.50 a ton on Wednesday, while refining crack slipped to a discount of $15.02 a barrel.

FUJAIRAH INVENTORIES FUJAIRAH
Fuel oil inventories at Fujairah dipped 0.3% at 11.41 million barrels (1.80 million tons) in the week to Oct 16, showed Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.

FUJAIRAH BUNKER SALES
Marine fuel sales at the UAE’s Fujairah eased to three-month lows in September, with monthly volumes logging year-on-year declines for the twelfth consecutive month, data showed.

September bunker sales, excluding lubricants, were at 628,639 cubic metres, or about 623,000 metric tons, showed Fujairah Oil Industry Zone (FOIZ) data published by S&P Global Commodity Insights.

Bunker uptake at Fujairah has largely softened through the year as some demand got diverted away to neighbouring ports like Khor Fakkan with cheaper prices, or outside port limits, according to industry sources.

OTHER NEWS
– Oil prices surged nearly 2% on Wednesday as tension escalated in the Middle East after hundreds were killed in a blast at a Gaza hospital, sparking concerns about potential oil supply disruptions from the region.
– China’s oil refinery throughput in September hit a record daily rate, data showed on Wednesday, as refiners increased run rates to cater for strong demand for transport fuel over the Golden Week holiday and improving manufacturing.

– Oil freight rates from Russia’s Baltic ports to India are up some 50% since last week as more shipowners quit the market after the first U.S. sanctions on shipowners carrying Russian crude priced above a G7 cap, three sources said.

– The world is not on track for zero-emission fuels to account for 5% of international shipping fuels by 2030, a new analysis has found, jeopardizing the shipping industry’s 2050 decarbonisation goal.

WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Shweta Agarwal)

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