Spot differential for 380-cst high sulphur fuel oil (HSFO) flipped into a discount in Asia on Wednesday, after holding in premiums for nearly a year.
Offers for spot April parcels continued to weaken, with trading house Trafigura offering 380-cst HSFO at discounts to Singapore quotes on Wednesday, while Mercuria was offering at parity for some dates.
The HSFO market has undergone wild swings this year, with spot benchmarks and margins rallying between mid-February and mid-March, before paring back in late-March.
Fundamentally, the spot market has been weighed by abundant supply arrivals since last month, while demand from both feedstock and bunkering sectors were soft, said trade sources.
Total fuel oil arrivals in Asia are expected to breach 4 million metric tons for April, preliminary ship-tracking data from LSEG showed, with more volumes to emerge in coming weeks.
On the derivatives front, cracks are still retaining some strength for May, sources said. Prompt 380-cst HSFO cracks (FO380BRTCKMc1) closed higher day-on-day at discounts of about $2.30 a barrel on Wednesday, LSEG data showed.
Meanwhile, cash differentials for very low sulphur fuel oil (VLSFO) found a floor recently, steadying in thin premiums, while cracks (LFO05SGBRTCMc1) closed at premiums of near $9 a barrel.
INVENTORY DATA
– Fujairah heavy fuel inventories (FUJHD04) surged 24.9% to 13.04 million barrels (2.05 million tons) in the week to March 31, hitting multi-year highs, showed FOIZ data published by S&P Global Commodity Insights.
OTHER NEWS
– Oil prices were little changed on Wednesday as traders remained cautious ahead of U.S. tariffs due to be announced at 2000 GMT, fearing they could exacerbate a global trade war and dampen demand for crude.
– Venezuela’s exports of crude oil and fuel fell in March as Washington’s imposition of secondary tariffs and the cancellation of key licenses to operate in the U.S.-sanctioned energy sector led to delays and cargo suspensions, according to ship tracking data and documents.
– Russia on Wednesday imposed restrictions on another major oil export route, suspending a mooring at the Black Sea port of Novorossiisk only a day after restricting loadings from a key Caspian pipeline.
– A U.S. oil and biofuel coalition met with the Environmental Protection Agency on Tuesday to make the case for higher federal mandates for biomass diesel blending, according to three sources familiar with the plans.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters
