Fuel oil markets maintained strength on Tuesday amid a rally primarily driven by sentiment, trade sources said.
Backwardation spreads widened at the prompt trading months for both high sulphur fuel oil (HSFO) and very low sulphur fuel oil (VLSFO), based on data from sources.
Reflecting the stronger market structure, spot premiums were pegged slightly higher day-on-day, though bids and offers were largely rangebound.
Refining margins steadied near recent highs, with 380-cst HSFO/Brent cracks holding near premiums of 80 cents a barrel, while VLSFO/Brent cracks (LFO05SGBRTCMc1) hovered near $11.75 per barrel.
The tighter sour crude complex has been keeping heavy fuel cracks and spreads supported, said sources, though some felt that fundamental tightness of fuel oil is still not evident despite recent concerns around sanctions.
REFINERY UPDATES
– State-run Hindustan Petroleum plans to increase the capacity of its Vizag oil refinery in southern India by as much as 20% to meet growing local fuel demand, its chairman Rajneesh Narang said.
– Indian Oil is buying Russian crude oil cargoes without the involvement of sanctioned entities and expects gasoline demand to grow 6-7% in the fiscal year 2026, the company’s chairman said on Tuesday.
– U.S. oil refiners are expected to have about 1.5 million barrels per day of capacity offline in the week ending February 14, increasing available refining capacity by 84,000 bpd, research company IIR Energy said.
