Asia Fuel Oil-HSFO margin slides to five-month lows

Asia’s refining margin for 380-cst high sulphur fuel oil (HSFO) slipped to five-month lows on Tuesday, while cash premiums inched lower for a sixth consecutive session.

The October 380-cst HSFO crack fell to a discount of $14.23 a barrel at the Asia close (0830 GMT), while cash premium dipped to $3.99 a metric ton.

The HSFO market has undergone a downward correction after a short-lived rally in August, while expectations of softer seasonal demand from the Middle East also weighed on prices.

Kuwait’s KPC offered 60,000 tons of 380-cst HSFO for loading in end-September via a tender that closes on Tuesday, said trade sources.

Meanwhile, the very low sulphur fuel oil (VLSFO) market extended a rebound, though upside is capped by continued prospects of higher supplies.

Cash premium for 0.5% VLSFO rose to $6.72 a metric ton, though October crack LFO05SGDUBCMc1 fell to a premium of $7.69 a barrel at 0830 GMT.

INCOMING SUPPLIES

Fuel oil supplies to Asia are expected to breach 6 million tons for September, up by nearly 5% from August, based on latest assessments from LSEG Oil Research this week.

Western supplies and Middle Eastern supplies were little changed from August, while regional intra-Asian supplies rose, the assessments showed.

OTHER NEWS

– Oil prices rose on Tuesday for a fourth consecutive session as weak U.S. shale output spurred further concerns about a supply deficit stemming from extended production cuts by Saudi Arabia and Russia.

– Saudi Arabia’s crude oil exports in July fell to their lowest for more than two years, data from the Joint Organizations Data Initiative showed on Monday.

– Russia’s United Oil- and Gas-Chemical Co. and China’s Xuan Yuan Industrial Development have agreed to jointly invest 5 billion yuan ($686 million) in construction of a transshipment oil complex in Russia’s far east, the Roscongress fund said on Monday.

– The United States is boosting access to commercial products tankers as part of a security drive to safeguard oil shipping for its armed forces in times of crisis, a top Department of Transportation official said.
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Krishna Chandra Eluri)