Asia Fuel Oil-Spot premiums rangebound as high supplies cap recovery

Spot price premiums for fuel oil were rangebound in Asia on Wednesday as high incoming supplies continued to cap a recovery.

Singapore’s cash premium for very low sulphur fuel oil (VLSFO) was pegged at $1.17 a metric ton, while cracks were at premiums of about $13.50 a barrel.

On the high-sulphur front, cracks have inched higher in recent trading sessions, though spot differentials remained stuck in discounts on bearish supply fundamentals.

The 380-cst high sulphur fuel oil (HSFO) cash differential was pegged at a discount of $2.80 a ton on Wednesday, while cracks FO380DUBCKMc1 hovered at discounts below $10 a barrel.

In its latest tender, Kuwait’s Al Zour refinery sold a cargo for loading between March 22 and 24, likely to a Japanese trading house, some market sources said. The cargo likely traded at a single-digit discount to VLSFO quotes, they added.

Regardless of the Kuwaiti cargoes, the broader market in Asia remains amply supplied and this will continue to put a lid on fuel oil benchmarks for the near term, said sources.

INVENTORY DATA

– Fujairah heavy fuel inventories FUJHD04 rose 7.2% to 9.62 million barrels (1.51 million tons) in the week to March 11, hitting a 10-week high, FOIZ data published by S&P Global Commodity Insights showed.

OTHER NEWS

– Oil prices rose on Wednesday on expectations of strong global demand, including in the world’s top consumer the United States, while somewhat sticky U.S. inflation did not significantly alter expectations that the Fed might start cutting rates soon.

– OPEC on Tuesday stuck to its forecast for relatively strong growth in global oil demand in 2024 and 2025, and further raised its economic growth forecast for this year, saying there was more room for improvement.

– The United States is trying to help India negotiate lower prices for Russian oil as it deepens sanctions on tankers carrying the petroleum above Western price caps, President Joe Biden’s energy envoy said.

– Azeri oil firm Socar has redeemed a $1.3 billion syndicated loan led by U.S. banks Citi and JP Morgan two years ahead of schedule, around the time the Azeri firm received a loan of a similar amount from Russian oil firm Lukoil, according to three banking and trading sources familiar with the matter.
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Devika Syamnath)