Asia’s cash differential for 380-cst high sulphur fuel oil (HSFO) spiked to a 16-month high on Wednesday, as bids continued to firm day-on-day on tight prompt supplies.

The product’s cash differential soared to a premium of $29.40 per metric ton, a level last higher in April 2022, while front-month crack climbed to a discount of $5.59 a barrel.

“Cracks are high and crude prices are also high, it’s tough (to deal) in the high-sulphur market this week,” a Singapore-based fuel oil trader said.

The rally emerged despite easing Chinese demand, with some industry sources skeptical of whether such prices could sustain.

In the downstream bunkering market, 380-cst marine fuel oil premiums have also risen amid the surge in cargo premiums, though lagging the extent of the increase, traders said.

Meanwhile, the very-low sulphur fuel oil (VLSFO) spot market was range-bound in single-digit premiums to cargo quotes.

The cash differential for 0.5% VLSFO was pegged at a premium of $3.57 a metric ton, while front-month margin rose to a premium of $10.51 a barrel.

In tenders, Indonesia’s Pertamina offered marine fuel oil for loading in September.

FUJAIRAH INVENTORIES FUJAIRAH/

Fuel oil inventories at Fujairah FUJHD04 dipped 2% at 9.49 million barrels (1.49 million tons) in the week to July 31, showed Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.

OTHER NEWS

– Oil prices rose on Wednesday as crude and fuel product inventory data showed robust demand from the U.S., world’s biggest fuel consumer.

– OPEC+ is unlikely to tweak its current oil output policy when a panel meets on Friday, six OPEC+ sources told Reuters, as tighter supplies and resilient demand drive an oil price rally.

– Oil exports from Russia’s Baltic ports, Primorsk and Ust-Luga, were set at 1.6 million tonnes for August 1-10, down from 1.8 million tonnes during the same period of July, two traders citing loading data said on Wednesday.

– The Biden administration has pulled an offer to buy 6 million barrels of oil for the Strategic Petroleum Reserve, an Energy Department spokesperson said, as oil prices are expected to keep rising after a output cut from Saudi Arabia.

Source: Reuters reported by Jeslyn Lerh and edited by Sonia Cheema