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Asia Fuel Oil-Refining cracks steady, spot premiums dip on quiet trade

Refining cracks for fuel oil were steady in Asia on Wednesday, while spot cash premiums eased slightly on largely quiet trade.

The front-month crack spread for very low sulphur fuel oil (VLSFO) closed at premiums of $8.35 a barrel, edging mildly higher from the previous day.

The VLSFO derivatives market has found steady ground this week following some sell-offs last week, though trade sources were keeping an eye on the sharp drop in the gasoline complex which could drag complex refining margins lower on the whole.

Meanwhile, high sulphur fuel oil (HSFO) cracks were little changed, with front-month 380-cst margin holding between discounts of $4.30 to $4.40 a barrel.

Spot cash premiums for both high-sulphur and low-sulphur grades dipped slightly on Wednesday, with trading momentum largely thin.

INVENTORY DATA

– Fujairah heavy fuel inventories rose 9.5% to 10.12 million barrels (1.59 million tons) in the week to May 27, rebounding to a five-week high, FOIZ data published by S&P Global Commodity Insights showed Wednesday.

OTHER NEWS

– Oil prices rose on Wednesday on expectations that major producers will extend output cuts at a meeting on Sunday and that fuel consumption will start rising with the start of the peak summer demand season.
– Saudi Arabia, the world’s biggest oil exporter, may cut prices for most crude grades it sells to Asia in July, the first cut in five months, as Middle East benchmarks and margins for Asian refiners have weakened, refining sources said.

– The growing shadow fleet of tankers transporting sanctioned Iranian, Venezuelan and Russian oil is filling up with the cheapest fuel available, hindering industry efforts to use cleaner fuel to cut shipping emissions, according to shipping data and sources.

– Hess shareholders on Tuesday approved the proposed $53 billion merger with Chevron that paves the way for the No. 2 U.S. oil company to gain a prize asset and a foothold in rival Exxon Mobil’s XOM.N massive Guyana discoveries.

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 Ravi Prakash Kumar)

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