The Singapore 0.5% VLSFO cash premium MFO05-SIN-DIF continued to edge higher on Thursday at $27.39 a metric ton, though the gain was milder after a sharp jump on Wednesday.

Market backwardation cooled slightly, with the balance-month/Dec timespread narrowing to $29.75 a ton on Thursday, compared with $34.50 a ton on Wednesday.

Led by the recent strength in the VLSFO market, the cash differential for 380-cst high sulphur fuel also flipped back into a premium, though market recovery is capped by persisting bearish factors.

The 380-cst HSFO differential rebounded to a premium of 25 cents a ton on Thursday, after its recent slump into discounts.

SINGAPORE INVENTORIES
Onshore fuel oil inventories fell 0.5% to 19.44 million barrels (3.06 million metric tons) in the week ended Nov. 1, data from Enterprise Singapore showed.

The dip came amid a firm market backwardation, which discourages storage economics and prompts selling interest as spot prices are higher than for later months, though a jump in net fuel oil imports capped the drawdown.

OTHER NEWS
– Oil gained on Thursday to snap its three-day decline as risk appetite returned to financial markets after the U.S. Federal Reserve kept benchmark interest rates on hold.

– Discounts on Russian oil sales have reduced from levels seen in June quarter, said Vivek C Tongaonkar, head of finance at Indian refiner Mangalore Refinery and Petrochemicals Ltd.

– Russia’s hasty restoration of a “damper” subsidy for oil refiners will not only cost the state budget 400 billion roubles ($4.3 billion) in subsidies this year, but also a one-off 350 billion roubles in taxes, Reuters calculations show.

– Shell reported a 34% annual drop in third-quarter profit to $6.2 billion as energy prices cooled, with strong trading of liquefied natural gas helping offset a sharp drop in its production.

WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade

Source: Reuters reported by Jeslyn Lerh and edited by Sohini Goswami