Asia’s very low sulphur fuel oil (VLSFO) showed signs of further easing on Thursday as backwardation narrowed at the prompt months, though high sulphur fuel oil (HSFO) held on to its recent strength.
Spot activity was thin for VLSFO amid scant offers, while bids also retreated to lower values.
Backwardation for the VLSFO balance-September and October timespread narrowed further to $18.75 per metric ton, paring back after hitting its widest level since November 2023 as of last week.
Meanwhile, the HSFO market continued to hold onto its recent strength, though some trade sources said this is expected to be short-lived. Supplies to Asia are expected to recover as the Middle East exits its peak summer demand period, the sources said.
Spot 380-cst HSFO traded at a strong premium for loading dates in late September, though lower offers emerged for dates in October.
In Singapore landed storage, the volume of fuel oil fell to its lowest in 16 weeks.
INVENTORY DATA
– Singapore onshore stockpiles STKRS-SIN were at 16.86 million barrels (around 2.65 million metric tons) in the week to Sept. 11, sliding 10.1% from the previous week, Enterprise Singapore data showed.
OTHER NEWS
– Oil prices rose more than 1% on Thursday, extending a rebound spurred by concern over Hurricane Francine’s impact on U.S. output, though a gloomy demand outlook capped gains.
– Saudi Arabia’s crude oil supply to China is set to rise to 46 million barrels in October, trade sources said on Thursday, after the world’s top oil exporter slashed prices for Asia, boosting demand.
– India wants oil producers group OPEC and its allies to raise oil output as there are countries such as India where fuel demand is rising, the nation’s oil secretary Pankaj Jain said on Thursday.
– The International Energy Agency (IEA) has cut its 2024 oil demand growth forecast by 70,000 barrels per day (bpd), or about 7.2%, to 900,000 bpd, it said in its monthly oil market report on Thursday.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: One trade
– 0.5% VLSFO: No tradeSource: Reuters reported by Jeslyn Lerh and edited by Mrigank Dhaniwala
Asia Fuel Oil-VLSFO eases while HSFO retains support
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