Asia Fuel Oil-HSFO premiums inch up while market structure firms

Spot premiums for high sulphur fuel oil (HSFO) edged higher on Wednesday amid a stronger backwardated market structure.

Intermonth spreads firmed for both 180-cst and 380-cst grades at the prompt month on robust trading momentum in the derivatives market, said trade sources.

Cracks for 380-cst HSFO in December also closed higher day-on-day, at discounts of about $4.35 a barrel, based on LSEG data at 0830 GMT.

Some sources perceived lingering tightness in the prompt loading market, though incoming supplies are expected to steady or increase in the coming weeks.

In tenders, Kuwait Petroleum Corporation sold an HSFO cargo of 80,000 tons this week for loading between Nov. 17 and 18. The cargo likely traded at premiums above $30 a ton to Middle East quotes, holding near levels for the previous cargo, said sources.

Meanwhile, very low sulphur fuel oil (VLSFO) market held largely rangebound from its previous session, while cracks LFO05SGDUBCMc1 closed lower at premiums of $13 a barrel on Wednesday, showed LSEG data.

INVENTORY DATA

– Fujairah heavy fuel inventories FUJHD04 climbed 4.5% to 8.70 million barrels (1.37 million tons) in the week to Nov. 11, FOIZ data published by S&P Global Commodity Insights showed.

OTHER NEWS

– Oil prices edged up on Wednesday on signs of near-term supply tightness but remained near their lowest in two weeks, a day after OPEC downgraded its forecast for global oil demand growth in 2024 and 2025.

– China’s newest refiner Shandong Yulong Petrochemical is operating its newly started 200,000-barrel-per-day (bpd) crude unit at around 90% and aims to start trial runs at a second unit of the same size in January, trade sources said.

– Indian Oil Corp expects to complete the expansion of its refineries in Panipat, Gujarat and Barauni by December of next year, said sources familiar with the information.

– The Dangote Oil Refinery has the capacity to produce winter diesel for the European market, an executive said, a further indication of its potential to disrupt the global refining market.

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)