Asia’s fuel oil markets were mixed on Monday as supply and demand fundamentals diverged, while very low sulphur fuel oil’s premium over a high-sulphur grade ticked up to a near one-month high.
The gradual emergence of December spot offers contributed to trading liquidity.
High sulphur fuel oil (HSFO) remained supported by expectations that an extension of OPEC+ output cuts would curb feedstock supply and production, while ample supply weighed on the low-sulphur market.
Very low sulphur fuel oil (VLSFO) arrivals into Singapore are expected to remain elevated for November following the high volumes recorded for October, particularly from some deep-sea regions such as Brazil, one trade source said.
If troubles persist at some regional gasoline produce units which use VLSFO as a feedstock, the market could remain under pressure, a second source said.
Cash premiums for 380-cst cargoes were firmer at around $14.7 a ton, reflecting deals in the market at higher premiums and also a steeper backwardation.
Likewise, on the 180-cst front, cash premiums closed the trading session higher, but deals were scant as buyers and sellers were in a stand-off over prices.
However, the Hi-5 spread – the price premium of 0.5% VLSFO to 380-cst HSFO – widened by $5 a ton from the previous trading session, recovering to a near one-month of high of $128.7 per ton.
Spot discussions for VLSFO cargoes on the window were equally minimal, but buying interest stayed firm at slightly higher premiums from the previous session, buoying cash premiums at $11.09 per ton.
In tenders, Malaysia’s Pengerang Refining offered around 570,000 barrels of hydrotreated atmospheric residue for Dec. 3-5 loading via a tender that closes Nov. 5 with same-day validity.
REFINERY
– Russia plans to take 1.8 million metric tons of refining capacity offline in November, an increase of 49% from an earlier plan, increasing the amount of crude oil available for export, Reuters calculations based on data from industry sources show.
Source: Reuters
