Asia Fuel Oil-Market stable to softer on ample supply outlook

Asia’s fuel oil market held steady to mildly softer on Tuesday, with ample supplies expected into December.

Spot premiums for very low sulphur fuel oil (VLSFO) dipped below $4 a metric ton, while backwardation continued to narrow at the prompt months.

Refining margin for VLSFO also softened, with December VLSFO-Dubai cracks closing lower at premiums of about $12 a barrel, based on LSEG data.

Amid weakness in the low-sulphur market, the hi-5 spread for December FO05-380SGMc1 narrowed further to nearly $102 a metric ton on Tuesday.

REFINERY UPDATES

– The large crude distillation unit was back to normal operation on Monday at Valero Energy Corp’s VLO.N 360,000 barrel-per-day Port Arthur, Texas refinery after completing repairs, said people familiar with plant operations.

OTHER NEWS

– Oil prices edged higher on Tuesday as investors took stock of a potential ceasefire between Israel and Hezbollah, weighing on oil’s risk premium.

– OPEC+ may consider leaving its current oil output cuts in place from Jan. 1 at its next meeting on Sunday, Azerbaijan’s Energy Minister Parviz Shahbazov told Reuters, as the group had already postponed hikes amid demand worries.

– Kazakhstan could sharply increase its crude oil exports out of Turkey’s port of Ceyhan, its energy minister said on Monday, in a move that would reduce the more than 80% share of flows it currently sends via Russia.

– Donald Trump’s transition team is putting together a wide-ranging energy package to roll out within days of his taking office that would approve export permits for new liquefied natural gas projects and increase oil drilling off the U.S. coast and on federal lands, according to two sources familiar with the plans.

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 Shailesh Kuber)