Asia’s spot differentials for fuel oil logged narrower discounts on Friday, though the prompt market continued to hold in a contango.
The very low sulphur fuel oil (VLSFO) market saw a slight improvement after an unplanned outage at Kuwait’s al-Zour refinery, a key producer of VLSFO.
However, the Asia market is still amply supplied by other regions, which means the impact is likely to be capped, said trade sources.
Meanwhile, high sulphur fuel oil (HSFO) market for the 380-cst grade also firmed as bids improved, though prompt timespreads held in a deep contango.
Downstream bunker premiums for both VLSFO and HSFO were hovering steadily in the low $10s over cargo quotes this week, seeing little recovery through the month, sources said.
Fuel oil cracks traded steady to higher. Singapore’s 380-cst HSFO crack (FO380BRTCKMc1) closed largely unchanged at a discount near $5 a barrel, while VLSFO crack (LFO05SGBRTCMc1) rose to a premium of about $6.60 a barrel, data compiled by LSEG showed.
INVENTORY DATA
– ARA fuel oil inventories (STK-FO-ARA) eased 0.3% to 0.92 million tons in the week to October 30, based on data from Dutch consultancy Insights Global.
OTHER NEWS
– Oil prices eased on Friday, heading for a third consecutive monthly decline, as a stronger U.S. dollar and weak China data capped gains while rising supply from major producers offset the impact of Western sanctions on Russian exports.
– Saudi Arabia may reduce its December crude price for Asian buyers to multi-month lows due to ample supplies, but demand to replace Russian supplies hit by Western sanctions could limit the cuts, sources said.
– State-owned Kuwait Petroleum Corp has offered additional heavy crude for prompt loading in November, two trade sources said, following an unplanned outage at its Al-Zour refinery.
– Russia-backed Indian refiner Nayara Energy has ramped up crude processing at its Vadinar refinery to 90% to 93% of capacity, two sources familiar with the matter said, after European Union sanctions curtailed operations earlier this year.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: One trade
– 0.5% VLSFO: No trade
Source: Reuters
