Asia Fuel Oil-VLSFO spot premium slides to three-month low

Asia’s spot premium for very low sulphur fuel oil (VLSFO) slipped to a three-month low on Friday, weighed by ample prompt supply in the market.

The Singapore VLSFO cash premium was pegged below $4.50 a metric ton, while backwardation continued to narrow at the prompt trading months.

Meanwhile, the hi-5 fuel oil spread narrowed for a third consecutive week, based on LSEG data.

The December hi-5 spread FO05-380SGMc1 closed at $109.63 a metric ton on Friday, narrowing 2% week-on-week.

The 380-cst high sulphur fuel oil (HSFO) held to its current levels, even though further gains were capped by heavy incoming cargo arrivals into December.

Refining margins for the low-sulphur and high-sulphur grades trended in opposite directions on Friday.

VLSFO cracks for December LFO05SGDUBCMc1 dipped day-on-day to premiums below $12.50 a barrel, while 380-cst HSFO cracks FO380DUBCKMc1 firmed to discounts narrower than $5.50 a barrel, showed LSEG data at 0830 GMT.

INVENTORY DATA

– Fuel oil inventories in the ARA STK-FO-ARA fell 4.1% to 1.22 million tons in the week to Nov. 21, data from Dutch consultancy Insights Global showed.

OTHER NEWS

– Oil prices were on track for a weekly rise on Friday as the Ukraine war intensified, with Russian President Vladimir Putin warning of a global conflict.
– The United States imposed new sanctions on Russia’s Gazprombank on Thursday, the Treasury Department said, as President Joe Biden steps up actions to punish Moscow for its invasion of Ukraine before he leaves office in January.

– Chinese refiner Rongsheng Petrochemical has purchased a total of 2.65 million barrels of heavy crude oil from the Americas for February delivery, according to trade sources on Friday.

– Several ships in Singapore and Rotterdam reported operational problems in recent months after using marine fuel blended with cashew nutshell liquid biofuel, fuel testing agency CTI-Maritec said in an advisory.

WINDOW TRADES

– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Krishna Chandra Eluri)