Asia’s very low sulphur fuel oil (VLSFO) crack hit its lowest since January 2023, data showed on Friday, as trading sentiment remained weighed by plentiful supply.

The October crack for Singapore VLSFO (LFO05SGBRTCMc1) closed at a premum of $5.75 a barrel, based on data compiled by LSEG. The value slid by nearly 30% week-on-week.

Sentiment has been less than upbeat even amid a hectic stream of discussions that took place during Asia Pacific Petroleum Conference events this week, market sources said.

“It’s a bit of a tough market this year so everyone didn’t seem so excited,” a fuel oil trader said.

Benchmarks for fuel oil remained largely weighed down by tepid demand and high supplies to Asia.

Malaysia’s Prefchem has offered more low-sulphur straight run (LSSR) fuel oil for sale in a tender that closed on Friday, market sources said, as a refining unit that processes the fuel remained shut.

The refiner offered two cargoes in its latest tender. One 250,000-barrel cargo is scheduled to load on September 15-16, while the other 540,000-barrel cargo is slated to load on September 24-25. This is in addition to two earlier cargoes sold in September.

Meanwhile, the high sulphur fuel oil (HSFO) market also held steady to softer, with cracks heading for a fifth consecutive week of declines.

The Singapore 380-cst HSFO crack (FO380BRTCKMc1) closed at a discount slightly wider than $5 a barrel, based on data from LSEG.

INVENTORY DATA

– ARA fuel oil inventories (STK-FO-ARA) fell 3.5% to 1.04 million tons in the week to September 11, based on data from Dutch consultancy Insights Global

– Fujairah heavy fuel inventories (FUJHD04) rebounded 27.9% to 7.10 million barrels (1.12 million tons) in the week to September 8, FOIZ data published by S&P Global Commodity Insights showed.
– Singapore residual fuel inventories (STKRS-SIN) slipped 3.2% to 26.53 million barrels (4.18 million metric tons) in the week to Sept. 10, according to Enterprise Singapore data.

OTHER NEWS

– Oil prices fell on Friday, extending the previous session’s hefty losses as concerns about oversupply and weaker U.S. demand outweighed worries about the risk of supply disruption from conflict in the Middle East and Ukraine.
– China’s independent teapot refiners are staring down a fresh hit to profits because of new rules introduced this month to crack down on untaxed r
efined oil, analysts say, as the sector struggles with tepid fuel demand and overcapacity.
– India’s largest private port operator, Adani Group, has banned entry of tankers that are sanctioned by Western countries at all of its ports, three sources said and documents show, a move that could hit Russian oil supplies for two Indian refiners.
– Top oil exporter Saudi Aramco has asked Asian buyers to lift more crude in October after the kingdom made deeper-than-expected price cuts for all grades amid growing supply, three sources familiar with the matter said.

WINDOW TRADES

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

Source: Reuters