Asia’s very low sulphur fuel oil (VLSFO) cracks retained support on Wednesday, though the market’s spot premium pared gains after a recent rebound.

The product’s front-month crack traded higher to a premium near $7.30 a barrel. However, trade sources remained cautious about the rally amid a supply overhang.

Singapore cash differential was pegged at a premium of $1.45 a metric ton, with offers retreating from the previous day.

Meanwhile, in China’s latest issuance of export quotas, Sinopec was the sole receiver for low-sulphur marine fuel allowances. The volume totalled 700,000 metric tons, sources said, lower than the 1 million tons issued in the same batch a year ago.

As for the high sulphur fuel oil market, spot discounts narrowed, while the product crack closed largely stable day-on-day near a discount of $5 a barrel.

Thailand’s PTT offered 18,000 tons of HSFO for loading in October, based on shipping records from industry sources. The tender closed on Wednesday.

INVENTORY DATA

Fujairah heavy fuel inventories slipped 24% to 5.39 million barrels (0.85 million tons) in the week to September 15, FOIZ data published by S&P Global Commodity Insights showed.

OTHER NEWS

– Oil prices eased slightly on Wednesday, after rising more than 1% in the previous session, though ongoing geopolitical jitters provided a floor under prices while traders also awaited an expected interest rate cut from the U.S. Federal Reserve.

– China has issued 8.395 million metric tons of export quotas for gasoline, jet fuel and diesel in its third batch of allowances this year, trade sources said.

– Russia’s oil pipeline monopoly Transneft has warned producers they may have to cut output following Ukraine’s drone attacks on critical export ports and refineries, three industry sources said on Tuesday.

– The Australian government said on Wednesday it would invest A$1.1 billion ($735 million) in the development of a low-carbon fuels industry, a move welcomed by farm groups, who hope it will boost demand for biofuel feedstocks like canola and sugarcane.

WINDOW TRADES

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

Source: Reuters