VLSFO market steadies; regional supplies ease
The 0.5% very low sulphur fuel oil market in Asia held steady on Tuesday as expectations of lower regional supplies in February limited the extent of price declines.
The front-month refining crack rose to $12.40 a barrel at the Asia close (0830 GMT), while the cash differential eased slightly to a premium of $22.20 a tonne over Singapore quotes on Tuesday.
Total fuel oil supplies to Asia are expected to surpass 4 million tonnes in February, Refinitiv ship-tracking data showed as of Tuesday, steady to lower from January.
The slightly softer trend was led by less exports from regional producers in Asia, as relatively higher refining margins for gasoline prompted a switch in production away from heavy distillates. Front-month gasoline cracks have climbed above low sulphur fuel oil cracks since early December, data showed.
Meanwhile, the high sulphur fuel oil market remained under downward pressure this week amid expectations of steady arrivals from Russia and the Middle East.
The cash differential for 180-cst HSFO slid further on Tuesday to a discount of $5.92 a tonne, after slumping to eight-month lows in the previous session.
The spot 380-cst HSFO market also extended declines, slipping to parity over Singapore quotes on Tuesday, with four cargoes trading at this value.
– 180-cst HSFO: No trade
– 380-cst HSFO: Four trades
– 0.5% VLSFO: No trade