Monday

05-05-2025 Vol 19

Asia Fuel Oil: Spot HSFO Trades at Discount Despite Strong Crack Spreads

The spot differential for high sulphur fuel oil (HSFO) in Asia dipped into discounts on Friday, despite a resilient outlook for refining margins. Market reports indicate that the region is experiencing a surplus, with ample cargo availability from the Middle East and Russia.

In Singapore, the cash differential for 380-cst HSFO slipped into discount for loading dates in the latter half of May, following a brief recovery into premiums that lasted just over a week. Additionally, intermonth spreads saw a significant decline, with both 180-cst and 380-cst HSFO grades trading into contango for the upcoming May/June contracts.

Despite this weakened market position for HSFO, the cracks for HSFO remained strong for the June contract, having reached their highest levels in over six years during the previous session. In contrast, very low sulphur fuel oil (VLSFO) demonstrated a positive trend, as cash differentials continued to rise.

The product is currently trading higher in the spot market, with prompt cracks remaining above premiums of $10 per barrel. Inventory levels provide further insights into the market dynamics.

As of the week ending May 1, Singapore’s onshore fuel oil stockpiles were reported at 22.47 million barrels, representing a 6.8% decline from the previous week but still above average levels. In Fujairah, heavy fuel inventories increased by 1.1% to 10.74 million barrels.

The ARA region also witnessed a rise in fuel oil inventories, climbing 3.8% to 1.21 million tons. In broader market news, oil prices experienced a drop on Friday as traders adjusted their positions ahead of an OPEC+ meeting, coupled with doubts regarding a potential resolution of the trade tensions between China and the United States.

Other notable developments include a vessel carrying Venezuelan oil set to discharge at a Venezuelan port and Mexico’s Pemex reporting record refining figures at its new Olmeca refinery. Discussions are also ongoing between QatarEnergy and Japanese firms regarding a long-term LNG supply agreement.

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