Asia’s spot market for 180-cst high sulphur fuel oil (HSFO) flipped back into a small premium on Tuesday on firmer trades, while Saudi Arabia’s latest crude production cuts were also perceived as bullish.
The 180-cst HSFO cash differential recovered to a premium of 23 cents a tonne over Singapore quotes after holding in a discount during the previous session, though 380-cst HSFO oftened to a premium of $1.75 a tonne as lower offers emerged.
While South Asia’s appetite for HSFO has softened this year despite a firm heat wave, overall global HSFO supply is still expected to be lean.
“The announced Saudi crude production cut in July should reduce availability of HSFO at the margin and thus support HSFO prices over the summer,” said consultancy FGE in a note on Tuesday.
Export availability from the Middle East is also expected to wane on higher domestic demand from the utility sector, FGE added.
Meanwhile, very-low sulphur fuel oil (VLSFO) continued to hold in a tight range on a lack of fresh drivers.
The 0.5% VLSFO cash premium dipped to $6.75 a tonne over Singapore quotes, while front-month refining margin eased slightly to a premium of $9.88 a barrel.
In tenders, Vietnam’s Nghi Son offered fuel oil for loading in end-June. The refinery offered 8,000 tonnes of the product for loading between June 25 and June 27, in a tender that closes on June 9, a notice on its website showed.
OTHER NEWS
– Oil prices edged lower on Tuesday, coming off gains made the previous day as concerns about the global economic backdrop outweighed supply worries raised when Saudi Arabia announced its biggest output cut in years.
– Asian refiners are likely to take less oil from Saudi Arabia for July and buy more spot cargoes such as those from the United Arab Emirates after the world’s top exporter unexpectedly raised prices and pledged to cut output, traders said.
– U.S. crude oil exports, already running close to a record level hit in March, should get a further boost next month from deep production cuts in Saudi Arabia, analysts said.
– Russia’s seaborne oil exports from Primorsk, Ust-Luga and Novorossiisk hit a four-year record of 2.4 million barrels per day (bpd) in May as domestic refineries maintenance season freed up extra barrels, Refinitiv Eikon data showed.
WINDOW TRADES
– 180-cst HSFO: Two trades
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Hellenic Shipping News
