Asia Fuel Oil-Hi-5 spread narrows more than 20% versus last week

Asia’s hi-5 fuel oil spread narrowed by over 20% week-on-week, reflecting a weaker market for very low sulphur fuel oil (VLSFO) while high sulphur fuel oil (HSFO) held its ground.

The premium of VLSFO over 380-cst HSFO, also known as the hi-5, fell to $87.15 a metric ton on Friday, showed LSEG data at Asia close (0830 GMT). The price spread held at its narrowest in more than five months.

The market has been underpinned by heavy incoming supplies to Asia, with several traders eyeing a steady-to-softer market into December.

Refining margins for VLSFO slipped below premiums of $11 a barrel on Friday, closing at more than a three-month low.

Meanwhile, 380-cst HSFO cracks closed at discounts of about $3 a barrel, sliding day-on-day but holding near a one-month high.

Bunker premiums dropped this month, with delivered-basis premiums softening for both low-sulphur and high-sulphur marine fuel grades, based on data from market sources.

INVENTORY DATA

– Fuel oil inventories in the ARA dipped 2.2% to 1.19 million tons in the week to Nov. 28, data from Dutch consultancy Insights Global showed.

OTHER NEWS

– Oil prices headed for a weekly drop of more than 3%, as concerns over supply risks from the Israel-Hezbollah conflict eased, alleviating earlier disruption fears.

– OPEC+ is discussing postponing its oil output hike due to start in January for the first quarter of 2025, OPEC+ sources told Reuters on Thursday, and will hold further talks on this and other options ahead of its delayed policy meeting on Dec. 5.

– Australia’s top fuel retailer Ampol said on Friday it had completed repairs at its fluidized catalytic cracking unit at the Lytton refinery in Queensland, and now expects total production for 2024 to be 5.2 billion liters.

– Alternative fuels could account for up to a fifth of A.P. Moller-Maersk’s marine fuel consumption in 2030 as part of its goal to reach net zero by 2040, a senior company executive said.

WINDOW TRADES

– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Shreya Biswas)