Asia’s spot high sulphur fuel oil (HSFO) market has sunken back into a discount this week as bearish factors weighed.

The 380-cst HSFO cash differential closed at a discount of $1.70 a metric ton on Wednesday, after holding onto thin premiums from mid-October.

Refining margin for 380-cst HSFO was steady at a discount of $16.46 a barrel at Wednesday’s Asia close. FO380DUBCKMc1

Easing U.S. sanctions on Venezuela’s energy sector could pave way for additional exports of the heavy sour crude. Heavy crude grades can be used to produce fuel oil.

Meanwhile, the cash premium for 0.5% very low sulphur fuel oil (VLSFO) eased for a sixth consecutive session on Tuesday, after a short-lived rally towards eight-month highs.

The premium edged lower for a seventh straight trading day, closing at $14.75 a ton on Wednesday, while margin for 0.5% VLSFO slipped to a premium of $9.72 a barrel.

FUJAIRAH INVENTORIES
Fuel oil inventories at Fujairah slipped 22.5% to seven-week lows, hitting 8.85 million barrels (1.39 million tons) in the week to Oct. 23, showed Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.

OTHER NEWS

– Oil fell for a fourth day on Wednesday as concerns about slowing European demand offset worries about Middle East supply disruptions stemming from the Israel-Hamas conflict in Gaza.

– China has set a minimum size for new oil refineries and will ban small crude processors that claim to be chemicals or bitumen producers, its state planner said on Wednesday.

– Global energy traders are emerging as early buyers of Venezuela’s stocks of crude and fuel oil, following last week’s easing of U.S. energy sanctions, according to people familiar with the matter.

– Tank storage company Vopak on Wednesday raised its full-year profit target, as it beat quarterly earnings expectations on the back of strong demand for energy storage.

Source: Reuters reported by Jeslyn Lerh and edited by Shweta Agarwal