Asia’s high sulphur fuel oil (HSFO) market steadied on Wednesday after rallying since the start of the month, while very-low sulphur fuel oil (VLSFO) weakened further.
The cash premium for 380-cst HSFO closed at $13 a metric ton, while front-month crack spread for the product eased day-on-day to a discount of $7.83 a barrel by 0830 GMT.
“We believe the current strength in HSFO is overdone and headwinds will prevail,” said consultancy FGE,
“HSFO demand for power generation has been lacklustre in South Asia, while high-sulphur straight run fuel oil imports into China is set to wane through Q3 due to weaker processing margins amid the domestic seasonal lull in diesel,” FGE added.
Meanwhile, the 0.5% VLSFO cash premium MFO05-SIN-DIF extended its downtrend to $1.95 a ton on Wednesday, while front-month crack LFO05SGDUBCMc1 fell to a premium of $7.33 a barrel.
FUJAIRAH INVENTORIES FUJAIRAH/
Fuel oil inventories at Fujairah FUJHD04 fell 10% to 9.35 million barrels (1.47 million tons) in the week to July 10, easing to three-week lows, based on Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.
OTHER NEWS
– Oil crept higher on Wednesday in a market caught between expectations supply cuts by the world’s biggest fuel exporters will drive prices higher and concerns global economic weakness will sap demand.
– The U.S. Energy Information Administration (EIA) cut its forecast for 2023 U.S. crude oil production by 50,000 barrels per day after the Organization of the Petroleum Exporting Countries (OPEC) and allies extended output cuts through 2024.
– Russian offline primary oil refining capacity is seen rising by 40% in August from July to 3.601 million tons, Reuters calculations showed on Wednesday, further complicating Russia’s efforts to cut oil exports.
– Iraq will begin trading crude oil for Iranian gas to end the recurring issue of payment delays to Tehran due to the need for U.S. approval, Iraqi Prime Minister Mohammed Shia Sudani said.
WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: Two trades
Source: Reuters reported by Jeslyn Lerh and edited by Shweta Agarwal
