Spot premiums for fuel oil rose on Monday, supported by supply uncertainty in February as some industry sources expect logistical challenges after recent sanctions on Russian oil.

Cash premiums for high sulphur fuel oil (HSFO) held steady to firmer on Monday, with several trading houses standing on the buying side.

Meanwhile, premiums for very low sulphur fuel oil (VLSFO) also firmed, with sentiment largely driven by recent supply-side risk in the high-sulphur market.

Margins for key fuel oil grades also extended gains, with 380-cst HSFO crack (FO380BRTCKMc1) closing at a discount of near $3 a barrel, while VLSFO crack (LFO05SGBRTCMc1) rose to a premium of $11.70 a barrel, as per LSEG data.

The spot market saw an array of bids for February-loading parcels just like last week, while offers were limited.

CHINA DATA

China’s exports of low-sulphur marine fuels were at 18.3 million tons 2024, dipping 1.6% from the previous year, customs data showed on Monday.

The decline emerged amid lower export quotas for 2023’s final batch, despite record-high volumes at its bunker hub Zhoushan.

Meanwhile, China’s fuel oil imports climbed further in 2024, up 7.4% to 24.1 million tons, a record high, based on the customs data as well as historical data from Kpler.

Chinese independent refineries have ramped up purchases of fuel oil to use as lower-cost feedstock since 2023, though demand is expected to drop in 2025 due to tax policies.

OTHER NEWS

– Oil prices fell on Monday as expectations of U.S. President-elect Donald Trump relaxing curbs on Russia’s energy sector in exchange for a deal to end the Ukraine war offset concern of supply disruption from harsher sanctions.
– China’s crude oil imports from top supplier Russia were up 1% in 2024 to a record high versus 2023, while purchases from Saudi Arabia dropped 9%, data showed on Monday, as refiners chased discounted Russian supplies to cope with weakened margins.

– Six Russian oil tankers still under construction by Russia’s Zvezda shipyard were included in U.S. sanctions imposed last week, the first time Washington is known to have banned tankers before they even set sail, much less carried sanctioned cargo.

– OPEC’s share in India’s crude oil imports edged up in 2024, rising for the first time in nine years, while top supplier Russia’s share remained steady, data obtained from trade sources showed.

WINDOW TRADES

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