Asia Fuel Oil-HSFO cracks log weekly climb, stockpiles draw lower at key hubs

Refining cracks for high sulphur fuel oil posted weekly gains as of Friday, as the market retained strength against a backdrop of low onshore inventories at key storage hubs.

Singapore’s prompt-month 380-cst HSFO crack closed at discounts of about $5.50 a barrel at 0830 GMT, logging a climb of nearly 20% from last week, LSEG data showed.

Stockpiles at key fuel oil storage hubs slumped this week, based on latest data.

Singapore inventories slumped to their lowest in five-and-a-half years as incoming supplies to Asia fell, with the Middle East exporting fewer cargoes due to peak summer demand.

Meanwhile, Fujairah inventories fell to six-week lows, drawn by firm domestic demand for power generation in the region during its summer months.

The tighter inventories are expected to keep HSFO margins buoyed, according to analysts.

In contrast, margins for very low sulphur fuel oil (VLSFO) have weakened as spot bunkering demand continued to remain tepid this week at the Singapore hub. Bunker premiums at Singapore have weakened further this week, based on industry sources.

The crack spread for VLSFO closed lower, at premiums below $8 a barrel on Friday, declining from last week.

INVENTORY DATA

– Fujairah inventories FUJHD04 fell 7.2%, to 9.24 million barrels (1.46 million tons) in the week to May 20, hitting six-week lows, FOIZ data published by S&P Global Commodity Insights showed.

– Singapore inventories slumped 17.5%, to 15.78 million barrels (2.48 million metric tons) in the week to May 22, the lowest in five-and-a-half years, Enterprise Singapore data showed.

– ARA inventories rose 10.2%, to 1.68 million tons in the week to April 23, breaching more than three-year highs, data from Dutch consultancy Insights Global showed.

OTHER NEWS

– Oil prices were stable on Friday as investors considered the latest comments from the U.S. Federal Reserve on interest rates amid sticky inflation, while signs of firming seasonal U.S. fuel demand lent support.

– State-run China National Offshore Oil Co said on Friday it had signed oil exploration and production concession contracts with Mozambique’s energy ministry and national energy company ENH.

– Indian refiners’ use of crude oil vessels to ship refined fuels such as diesel to key European markets has diminished in May after volumes neared two-year high levels last month, trade sources and analysts said.

– Spain’s Repsol has received a license from the U.S. Treasury Department authorizing the energy company to continue and expand its oil and gas business in Venezuela, sources close to the decision said on Thursday.
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Pooja Desai)