Asia’s hi-5 fuel oil spread widened for the fourth consecutive trading session on Tuesday, with 380-cst high sulphur fuel oil (HSFO) benchmarks softening in recent sessions, while 0.5% very low sulphur fuel oil (VLSFO) benchmarks gained strength.
The October hi-5 spread, which is the price premium of VLSFO over 380-cst HSFO, closed above $159 a metric ton, based on LSEG data on Tuesday. The spread affects scrubber and bunkering economics.
The HSFO market has shown signs of weakening on expectations of softer import demand from China into the fourth quarter. The market backwardation for 380-cst HSFO has also weakened in recent sessions, while cash premiums came under mild pressure.
In contrast, the VLSFO market has held stable to firmer as supply tightness continued for prompt loading dates.
Refining cracks for both grades also trended in opposite directions. October VLSFO/Dubai cracks breached premiums of $15 a barrel on Tuesday, while 380-cst HSFO closed lower day-on-day at discounts of about $8.70 a barrel.
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Shailesh Kuber)
