Asia’s refining cracks for 380-cst high sulphur fuel oil (HSFO) hit a multi-year high on Wednesday, buoyed by a drop in crude oil futures and seasonal market strength into late-Q2.
Singapore 380-cst /Brent crack (FO380BRTCKMc1) closed at a premium of $2.15 a barrel for the prompt contract, reaching its highest since November 2018, data compiled by LSEG showed.
The derivatives market for HSFO has been seeing strength ahead on the forward curve, market sources said. HSFO usually strengthens into the second quarter, when Middle Eastern summer demand gathers pace.
Timespread for the /July 380-cst HSFO contract held at a strong backwardation close to $10 a metric ton, while the /August contract traded above $13 a ton.
Despite wild swings in the derivative markets, spot trading momentum remained broadly quiet at month’s end.
A lower-priced trade emerged for very low sulphur fuel oil (VLSFO) on Wednesday, weighing on the cash premium slightly. Meanwhile, the VLSFO crack (LFO05SGBRTCMc1) held above premiums of $10 a barrel.
REFINERY UPDATES
– Portugal’s Galp will be gradually restarting units at its Sines oil refinery over the coming days after the major Iberian power outage on Monday forced it to suspend operations, a spokesperson for the company said.
– Mexico’s new Olmeca refinery is ready to restart production, Mexican President Claudia Sheinbaum said, denying that a temporary outage had been caused by sabotage of its catalytic cracking unit.
OTHER NEWS
– Oil prices extended declines on Wednesday and were set for their largest monthly drop in more than three years as the global trade war eroded the outlook for fuel demand, while fears of mounting supply also weighed.
– China has waived the 125% tariff on ethane imports from the United States imposed earlier this month, two sources with knowledge of the matter said on Tuesday, among a group of products that have been granted exemptions.
– Russia’s offline primary oil refining capacity is seen rising by 5.7% in May from April to 3.18 million metric tons, according to Reuters calculations based on data from industry sources.
– U.S. industrial conglomerate Koch’s Minerals & Trading unit is exiting the crude and refined products business to focus on more consumer-facing products, a spokesperson for KM&T said.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters
