Asia’s high sulphur fuel oil (HSFO) market firmed on Wednesday as strong bids emerged on the first day of a new trading month, while the very low sulphur fuel oil (VLSFO) market continued to retain downward pressure amid soft demand.

The spot 180-cst cash differential (FO180-SIN-DIF) edged higher at $3.11 a tonne over Singapore quotes, with two trades emerging.

There has been market talk of tighter supplies of viscosity cutter stocks, leading to a stable-to-firmer 180-cst HSFO market despite heavy HSFO arrivals for the broader market.

In contrast, the 0.5% VLSFO market continued to be underpinned by downward pressure amid tepid bunkering demand and aggressive selling.

The 0.5% VLSFO cash differential (MFO05-SIN-DIF) dipped to $4.95 a tonne on Wednesday, with bunker fuel premiums set for a bumpy recovery in March in Singapore as refuelling demand from the shipping sector softened sharply in recent weeks, trade sources said.

Latest spot deals on a delivered basis were between $10 and $13 a tonne over Singapore quotes, according to traders. The delivered/ex-wharf spread has narrowed recently, even flipping to a negative spread in some instances, sources said.

FUJAIRAH INVENTORIES

Residual fuel oil stocks at Fujairah climbed 7% to 13.20 million barrels (2.08 million tonnes) in the week ended Feb. 27, extending gains from the previous week’s surge, showed Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.

Russian fuel oil barrels continued to flood the trading and blending hub of Fujairah, trade sources said.

PLATTS ANNOUNCEMENT

Commodities pricing agency S&P Global Platts will be excluding Russian-origin material from its assessments of fuel oil cargoes and bunker fuel in Asia and the Middle East from March 1, the company said in a note to subscribers on Wednesday.

“The majority of feedback that Platts received suggested that Russian-origin material was no longer merchantable in the open-origin Asian fuel oil and bunker markets and supported its exclusion from the relevant Platts assessments,” the company said.

OTHER NEWS

– Oil slipped on Wednesday, giving up an earlier gain, as signs of ample supply and rising U.S. crude inventories countered hopes for higher demand arising from a jump in manufacturing in top crude importer China.

– China’s CNOOC Ltd has discovered a new oilfield with light crude reserves of 100 million tonnes in the Bohai Sea, which stretches along China’s northern coastline, the company said on Wednesday.

– China’s Sinopec Corp said on Wednesday it has started building a project worth 10.8 billion yuan ($1.56 billion) in a northern subsidiary refinery aimed at manufacturing more high-end chemicals.

– U.S. crude oil production fell in December to 12.10 million barrels per day (bpd), its lowest since August 2022, Energy Information Administration (EIA) data showed.

WINDOW TRADES

– 180-cst HSFO: Two trades
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade

Source: Reuters