Spot differentials for fuel oil fell on Tuesday, weighed by plentiful supplies and slow demand, trade sources said.
High sulphur fuel oil (HSFO) market extended declines from the previous session, with premiums for spot cargoes dropping amid a contracting market structure. Meanwhile, the very low sulphur fuel oil (VLSFO) market held in narrow premiums.
Downstream demand in the Singapore bunker market was tepid since the start of the year, with delivered marine fuel premiums at risk of further downside, sources said.
Backwardation spreads continued to narrow for the key fuel oil grades at prompt trading months, while refining margins held steady to softer.
Singapore February 380-cst HSFO cracks (FO380DUBCKMc1) slipped to discounts of about $6.75 per barrel on Tuesday, based on LSEG data, while VLSFO cracks (LFO05SGDUBCMc1) remained trapped near premiums of $10 per barrel in recent sessions.
Supply inventories at Singapore remained high due to the influx of barrels in the previous quarter, trade sources said.
CHINA PORT UPDATES
– China’s Shandong Port Group issued a notice on Monday banning U.S. sanctioned oil vessels from its network of ports, according to three traders, potentially restricting blacklisted vessels from the network of major terminals on China’s east coast.
