Asia Fuel Oil-VLSFO rally cools; HSFO largely stable

Asia’s very low sulphur fuel oil (VLSFO) benchmarks steadied on Wednesday after rallying on Tuesday, while the high sulphur fuel oil (HSFO) market was largely unchanged.
Spot bids for September cargoes retreated, while VLSFO/Dubai cracks for September closed at $12.77 per barrel, up marginally from the previous session, LSEG data showed.
The crack had rallied to a five-month high on Tuesday on the back of firmer bidding activity.
Backwardation at the prompt months continued to widen for VLSFO day-on-day, breaching $11.50 per ton on Wednesday compared to $10 per ton the previous day, based on data from market sources.
Spot HSFO benchmarks were broadly unchanged in thin trade, though backwardation widened for both the 180-cst and 380-cst grades.
Meanwhile, India’s BPCL offered 30,000 tons of 180-cst HSFO for loading in early September. The tender closes on Wednesday, according to sources and shipping records.
INVENTORY DATA
– Fujairah heavy fuel inventories FUJHD04 fell for a third straight week to 7.80 million barrels (1.23 million tons) in the week to August 19, hitting their lowest in two and a half years, based on FOIZ data published by S&P Global Commodity Insights.
OTHER NEWS
– Oil prices held broadly steady on Wednesday after a run of declines that have pushed Brent down to almost $77, driven by stubborn fears over Chinese demand and diminishing concerns about conflict spreading in the Middle East.
– Goldman Sachs said it expected Brent crude prices to fall to $68 per barrel by late 2025 if China oil demand remains flat through end of next year.
– Iraq will share profits with BP from developing its giant Kirkuk oil and gas fields, two officials said on Tuesday, as the country moves away from low-margin service contracts to speed up production growth and lure back Western majors.
– Japan’s Toyota Tsusho will be developing and supplying biofuels In Indonesia, according to a Nikkei report.
WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters