Asia’s high sulphur fuel oil (HSFO) market continued to ease on Thursday, while onshore inventories in Singapore recovered for a second consecutive week.

The recent rally in HSFO has shown signs of losing steam this week, traders and analysts said.

Refining cracks for 380-cst HSFO fell to discounts of about $6.40 a barrel on Thursday, while cash premiums dipped below $14 a metric ton.

Chinese demand for HSFO as a refining feedstock has also retreated due to the recent price strength, with monthly import volumes tapering off in May and June, based on trade sources and ship-tracking data.

Inventories in Singapore have also edged higher in recent weeks, recovering to a three-week high.

Meanwhile, very low sulphur fuel oil was broadly steady on Thursday, with refining margins LFO05SGDUBCMc1 remaining below premiums of $9 a barrel.

INVENTORY DATA

– Singapore inventories STKRS-SIN rose 11.0% to 18.86 million barrels (2.97 million metric tons) in the week ended June 5, Enterprise Singapore data showed.

OTHER NEWS

– Oil prices were stable on Thursday, as support from growing expectations of an interest rate cut from the U.S. Federal Reserve in September offset higher U.S. inventories and OPEC+ plans to gradually increase supply.

– Saudi Arabia lowered its official selling prices to Asia for July, a document seen by Reuters showed on Wednesday.

– Trading house Trafigura posted a more than 74% drop in net profit in the first half of its 2024 financial year, the lowest since 2020 for the same period, as the extreme turbulence that defined commodity markets in recent years fizzled out.

– Sweltering heat and policy measures are fuelling a surge in the use of gas-fired power in India, with imports of liquefied natural gas forecast to rise sharply over the next two years, industry officials and experts say.

WINDOW TRADES

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

Source: Reuters reported by Jeslyn Lerh and edited by Ravi Prakash Kumar