Asia’s spot fuel oil markets exhibited a stable demeanor on Friday amidst a quiet trading atmosphere, despite a notable influx of bids and offers. The cash differential for the 380-cst high sulphur fuel oil (HSFO) in Singapore was reported at parity to cargo quotes, marking a shift after several weeks of trading at discounts.
Industry sources indicate that Iraq’s SOMO has issued a term tender for HSFO, available for loading between July and December. This tender involves approximately 142,500 metric tons of HSFO to be lifted from the Khor al-Zubair port in Iraq.
The deadline for the tender is set for May 18, with a validity period extending up to 20 days. Recent months have seen significant volumes of Iraqi fuel oil flow into Asia, contributing to a well-supplied market alongside imports from other regions, according to a fuel oil trader.
In the realm of very low sulphur fuel oil (VLSFO), market conditions remained relatively unchanged, sustaining some recent support. Meanwhile, cracks for VLSFO hovered near premiums of $12 a barrel, while HSFO 380-cst cracks remained stable above $2 a barrel, bolstered by the strength observed in the Dubai crude complex.
Inventory data revealed a 5.0% decrease in ARA fuel oil inventories, which fell to 1.15 million tons in the week leading up to May 8, according to Insights Global, a Dutch consultancy. On the broader oil landscape, prices remained largely stable as indications emerged of easing trade tensions between the U.S. and China.
In a related note, the U.S. administration has put sanctions on a third Chinese oil refinery and port operators due to their Iranian oil purchases, coinciding with ongoing U.S.-Iran nuclear discussions. Additionally, Britain plans to sanction up to 100 Russian oil tankers in response to the war in Ukraine.
Meanwhile, Mexican state company Pemex aims to increase oil production by reopening old wells as it faces challenges in meeting government targets.