Asia’s market structure for key fuel oil grades firmed slightly on Monday, though downside risk lingered amid supply pressure.
The front-month contango for very low sulphur fuel oil (VLSFO) narrowed at the start of the trading week, though spot differentials remained steadily discounted in the wake of ample incoming volumes and high inventories.
Meanwhile, backwardation for high sulphur fuel oil (HSFO) widened, but a cautious sentiment lingered.
In its latest tender, India’s HPCL offered another cargo of HSFO for loading in October. This came on top of two cargoes sold via a tender that closed last week.
The latest cargo will load from Mumbai between October 7 and 9, with the tender closing on Monday, based on industry sources.
As for margins, both grades held their ground. VLSFO’s October crack (LFO05SGBRTCMc1) held near a premium of $7 a barrel, while the crack for 380-cst HSFO (FO380BRTCKMc1) closed at a discount of about $4.45 a barrel, based on data compiled by LSEG.
CHINA DATA
China’s August fuel oil imports retreated following a sharp increase in July, customs data showed. The imports fell 26% month-on-month to 1.46 million metric tons.
Meanwhile, China’s exports of low-sulphur marine fuels totalled 1.64 million tons in August, up 13% from July and edging 12% higher year-on-year.
OTHER NEWS
– Oil prices gained on Monday supported by geopolitical tension in Europe and the Middle East, although the prospect of more oil supply and concern about the impact of trade tariffs on global fuel demand weighed.
– China’s crude oil imports from Russia, its biggest supplier, slid 15.2% in August from a year earlier, and also slowed from July by 8.8%, Chinese customs data showed on Saturday.
– Iraq has increased oil exports following the gradual unwinding of voluntary production cuts under an OPEC+ agreement, the country’s state oil marketer SOMO said on Sunday.
– Indonesia will allow private fuel retailers, such as Shell and BP, to import more gasoline through state energy firm Pertamina as their petrol stations are running dry, the energy minister said.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: One trade
– 0.5% VLSFO: No trade
Source: Reuters
