Asia’s 380-cst high sulphur fuel oil (HSFO) cracks flipped back into discounts to crude on Tuesday as volatile trading continued in the derivatives market.

Singapore March 380-cst HSFO/Brent crack closed at a discount of 27 cents a barrel on Tuesday, based on LSEG data. The crack has been fluctuating between narrow discounts and narrow premiums to Brent in the last two weeks.

Backwardation spreads for the 380-cst March/April contract remained wide above $18 per metric ton, though showed signs of paring back in recent sessions.

The HSFO rally was mainly driven by pricing agendas instead of fundamentals, said traders. The market is not tight, while demand remained lukewarm from feedstock and bunkering sectors.

Meanwhile, the market for very low sulphur fuel oil (VLSFO) remained skewed to the downside amid the absence of bullish drivers, with spot premiums steadying at thin premiums for both cargo and delivered bunkers, said sources.

VLSFO cracks softened to premiums below $10 per barrel on Tuesday, while the hi-5 spread (FO05-380SGMc1) slipped below $65 a metric ton.

In tenders closing on Tuesday , Kuwait’s KPC offered 60,000 tons of HSFO for loading between March 14 and 15. while Taiwan’s Formosa offered two options for LSFO in March, based on market sources.

OTHER NEWS

– Oil prices rose for a second day on Tuesday as fresh U.S. sanctions imposed on Middle Eastern producer Iran increased concerns supply might tighten and as global refining margins remained strong.

– The United States imposed a fresh round of sanctions targeting Iran’s oil industry on Monday, hitting more than 30 brokers, tanker operators, and shipping companies for their role in selling and transporting Iranian petroleum, the Treasury Department said.

– Brazil’s state-run oil company Petrobras will invest around 5.5 billion reais ($960 million) to turn its Riograndense refinery into the country’s first biorefinery, Chief Executive Magda Chambriard said on Monday.

– U.S. President Donald Trump said on Monday he wanted the Keystone XL Pipeline built and pledged easy regulatory approvals for the project, which was opposed for years by environmentalists before its permit was revoked by the Biden administration.

WINDOW TRADES

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

Source: Reuters