Asia Fuel Oil-Market firms with stronger bids, wider timespreads
Asia’s fuel oil market strengthened on Wednesday with firmer bids for spot cargoes and wider backwardation timespreads.
The 380-cst high sulphur fuel oil (HSFO) cash premium rose to $6 a metric ton, while the 380-cst HSFO Oct/Nov timespread widened by $3.25 day-on-day to $12 a ton at the Asia close.
The tight availability of fungible and merchantable fuel in the market may provide support to the term structure should Russian fuel oil volumes contract, analysts from LSEG Oil Research said in a report this week.
The lower Russian fuel oil volumes could come amid heavier planned seasonal refinery maintenance, which began in early September and is expected to peak in mid-October, the analysts added.
Meanwhile, the 0.5% very low sulphur fuel oil (VLSFO) market also firmed on Wednesday after stronger bids emerged, with the cash premium MFO05-SIN-DIF climbing to $10.41 a ton.
Refining margins for both HSFO and VLSFO climbed. The October 380-cst HSFO crack FO380DUBCKMc1 closed at a discount of $10.65 a barrel at Wednesday’s Asia close, while 0.5% VLSFO closed for LFO05SGDUBCMc1 at a premium of $9.08 a barrel.
In tenders, India’s MRPL offered 40,000 tons of vacuum gasoil for loading between Oct. 16 and 18.
FUJAIRAH INVENTORIES FUJAIRAH/
Fuel oil inventories at Fujairah FUJHD04 was little changed at 10.18 million barrels (1.60 million tons) in the week to Sept. 25, showed Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.
– Oil prices rose on Wednesday as markets focused on supply tightness heading into winter and a “soft landing” for the U.S. economy.
– Pakistan National Refinery Limited (NRL) has started producing very low sulphur fuel oil for ships and is planning to expand its monthly output by at least five-fold in six months, the company said late Tuesday.
– China’s oil product exports are set to rise in October as state-owned refiners capitalise on lucrative margins and some western demand, while international flights recover, industry sources and analysts said.
– India will set carbon emission reduction targets for four fossil fuel dependent sectors, as the Asian country looks to align its industry with the country’s greenhouse emissions reduction target, two government officials said.
WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: One trade
– 0.5% VLSFO: No trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Maju Samuel)