Asia’s refining margin for 380-cst high sulphur fuel oil (HSFO) closed at a nine-month high on the last day of May, data showed, supported by tight incoming supplies this month.

The prompt-month crack was pegged at a discount of $3.85 a barrel on Friday, based on LSEG data at 0830 GMT.

Total supplies to Asia have dropped this month, led by lower arrivals from the Middle East and Russia as peak summer demand from the Middle East kept more barrels in that region.

However, cash premiums for 380-cst HSFO eased on Friday as a lower offer emerged for some loading dates in the second half of June.
Trade sources expect a slight recovery in inventories during then, on the back of softer demand from China amid the high prices.

Meanwhile, benchmarks for very low sulphur fuel oil (VLSFO) remain capped by lukewarm demand.

Cash premiums for VLSFO closed at levels below $4 a ton on Friday, while delivered bunker premiums remained near year-to-date lows of below $10 a ton, based on market sources. Cracks were stable at premiums of $8.40 a barrel.

INVENTORY DATA

– ARA inventories fell 8.2% to 1.55 million tons in the week to May 30, data from Dutch consultancy Insights Global showed.

OTHER NEWS

– Oil prices eased on Thursday after resilient U.S. economic activity pointed to borrowing costs staying higher for longer in a potential blow to demand.

– Three new berths will start operations at Singapore Tuas Port later this year to tackle extended waiting times for ships after Red Sea shipping tensions boosted vessel arrivals, said Singapore’s Maritime and Port Authority.

– Ship traffic in Turkey’s Bosphorus Strait is set to resume for southbound vessels as of 0700 GMT on Friday, after a suspension due to an engine failure on one vessel, the Tribeca shipping agency said.

– Shipping fuel regulations introduced in 2020 have led to a substantial cut in sulphur dioxide pollution, but may also have made the ocean warmer by reducing cloud cover, according to a modelling study in a paper.

WINDOW TRADES

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

Source: Reuters reported by Jeslyn Lerh and edited by Shailesh Kuber