Cracks for very low sulphur fuel oil (VLSFO) gained on Friday even as spot premiums were largely rangebound, while the market eyed China’s new oil export quotas in a third batch for 2024.
The quotas comprised 8 million metric tons of clean refined fuel and 1 million tons of marine fuel, based on Chinese commodities consultancies and trade sources.
The marine fuel export quota for the third batch was below market expectations of 2 million to 3 million tons, which could mean less domestic supply available for bunkering in China and may lead to more inflows from Singapore.
However, the lower volume was unlikely to have a sustained impact on market prices as China’s bunker sales volumes have dropped so far in 2024 compared with 2023.
Export volume for bunkering totalled 1.46 million tons in August, hitting five-month lows, customs data showed on Friday.
Meanwhile, imports of fuel oil rebounded to three-month highs in August, totalling 1.90 million tons.
A looming tax revamp could have driven some refiners to pick up more barrels ahead of its implementation, while a softer high sulphur fuel oil market in August also spurred buying interest, market sources said.
Refining cracks climbed on Friday, with the October VLSFO/Dubai contract closing higher at premiums above $13.50 per barrel, showed LSEG data.
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Shreya Biswas)
