Asia Fuel Oil-VLSFO margin posts weekly drop but cash premium climbs
Asia’s very low sulphur fuel oil (VLSFO) refining margin posted a weekly decline on Friday, though the product’s cash premium recovered in recent sessions.
The 0.5% VLSFO crack fell to a premium of $8.75 a barrel at the Asia close on Friday, down about 3% from last week, according to LSEG data.
A recent drop in gasoline refining cracks are likely to lead to the diversion of more blendstocks into the bunker pool instead of the refining feedstocks pool, industry sources said.
This could cap recovery in VLSFO amid potentially more supplies, while inflows from the West to the East have also edged higher this month.
However, the product’s cash premium MFO05-SIN-DIF has rebounded in recent trading sessions amid stronger spot bidding, rising to $11.41 a metric ton on Friday.
Meanwhile, cash premiums for high sulphur fuel oil (HSFO) eased on Friday as market backwardation softened.
The 380-cst HSFO cash premium FO380-SIN-DIF was pegged at $5.50 a ton, while the crack FO380DUBCKMc1 fell to a discount of $12.51 a barrel at the Asia close.
Inventories at ARA STK-FO-ARA fell 3.4% to 1.04 million tons in the week to Sept. 28, hitting nine-month lows, latest data from Dutch consultancy Insights Global showed.
– Oil prices slipped on Friday but were headed for a weekly gain, driven by tight U.S. supply and expectations of strong fuel demand in China during the Golden Week holiday.
– Russia may introduce quotas on overseas fuel exports if a complete export ban imposed last week does not succeed in bringing down persistently high gasoline and diesel prices, its Deputy Prime Minister Alexander Novak said.
– Record volumes of refined products were shipped from Singapore to Mexico in the third quarter, amid lower U.S. exports to the Latin American country caused by peak summer demand and slow shipping through the Panama Canal, industry sources and analysts say.
– Japanese trading house Mitsubishi is considering the conversion of the Namikata terminal near Hiroshima into a fuel ammonia import hub, a company executive told a business conference in Tokyo on Friday.
WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Varun H K)