Asia’s high sulphur fuel oil (HSFO) market softened on Thursday, with cracks retreating from six-week highs amid profit taking.

The Singapore 380-cst HSFO crack (FO380BRTCKMc1) for October slipped to a discount near $3.85 a barrel on Thursday, after closing nearer to a discount of $3 a barrel a day earlier, based on data compiled by LSEG.

Fundamentally, the Asia market is still well-supplied for prompt loading dates, market sources said. High-sulphur inflows from key origins such as Russia, Iraq and the UAE were higher month-on-month in September, showed Kpler ship-tracking data.

Singapore’s onshore fuel oil stockpiles retreated for a third consecutive week, but still averaged higher in September so far compared to August, Enterprise Singapore data showed.

Demand for bunker fuel has also been tepid in recent weeks in Singapore, weighing on prices of very low sulphur fuel oil (VLSFO), market sources said. Bunker premiums for VLSFO are still stuck in low $10s over cargo quotes, broadly stagnant week-on-week, they added.

Expectations of heavy arrivals of blending components and crudes for the low-sulphur supply pool also weighed on cargo benchmarks, with cash differentials remaining in discounts, while Singapore’s VLSFO crack (LFO05SGBRTCMc1) hovered near a premium below $7 a barrel.

INVENTORY DATA

– Singapore residual fuel inventories (STKRS-SIN) fell 10.3% to 22.80 million barrels (3.59 million metric tons) in the week to September 25, according to Enterprise Singapore data.

OTHER NEWS

– Oil prices edged down as investors booked profits after a jump during the prior session on a surprise drop in U.S. weekly crude inventories and concerns Ukraine’s attacks on Russia’s energy infrastructure could disrupt supplies.
– Indian oil refiners are increasing gasoline and diesel exports to their highest levels in several years, driven by expanded crude processing capacity and increased domestic ethanol blending that has freed up fuel supplies for overseas markets, traders and analysts said.
– Eight oil companies operating in Iraqi Kurdistan, representing over 90% of production, reached agreements in principle with Iraq’s federal and Kurdish regional government to resume oil exports, an industry umbrella group said.
– Italian energy group Eni has completed the sale of a 30% stake sale in the Ivory Coast’s Baleine offshore project to global commodity trader Vitol, it said in a statement on Thursday.

WINDOW TRADES

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

Source: Reuters