High sulphur fuel premiums extend declines

Spot premiums for Asia’s high sulphur fuel oil (HSFO) market extended declines on Tuesday as softer offers emerged, while broader sentiment remained uncertain.

Russia is likely to continue exporting usual volumes of its HSFO barrels, which will eventually find their way to the receiving markets, according to industry sources.

Slower Chinese import demand also capped strength in spot HSFO benchmarks, with buying volumes from independent refiners expected to remain weak this month.

The HSFO derivatives market has been undergoing swings of volatile movements this year. In the week so far, cracks have extended declines, after rallying sharply higher last week.

Singapore prompt 380-cst HSFO/Brent crack (FO380BRTCKMc1) closed lower at a discount of near $2.15 a barrel on Tuesday, sliding for a second day, based on LSEG data.

Meanwhile, spot market for very low sulphur fuel oil (VLSFO) stayed rangebound in largely quiet trade, while refining cracks closed at premiums of about $11.30 a barrel.

In tenders, Pakistan’s PARCO is offering 50,000 tons of 180-cst HSFO for loading in early March, based on industry sources. The tender closes on Feb. 6, showed a notice on its website.

OTHER NEWS

– U.S. crude prices fell on Tuesday as U.S. tariffs on China took effect, though President Donald Trump paused a decision for a month on steep levies on neighbours Canada and Mexico.

– China is the world’s top energy importer but its purchases from the United States are relatively modest, blunting the impact of Beijing’s move on Tuesday to slap retaliatory tariffs on imports of U.S. crude oil, liquefied natural gas and coal.

– OPEC+ agreed to stick to its policy of gradually raising oil output from April on Monday and removed the U.S. government’s Energy Information Administration from the sources used to monitor its production and adherence to supply pacts.

– Colombian energy company Ecopetrol said it has reached an agreement to renew its oil joint venture with Occidental Petroleum in the U.S. Permian Basin in Texas.

WINDOW TRADES

– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters