Margins for high sulfur fuel oil (HSFO) in Asia have seen a second consecutive week of declines, while very low sulfur fuel oil (VLSFO) has dropped for a third week. Recent data revealed that the prompt-month 380-cst HSFO/Brent crack closed with a discount of 9 cents per barrel, a notable change from premiums exceeding $2 from the previous week.
In contrast, the HSFO/Dubai crack managed to close at a premium of 25 cents per barrel. Market analysts anticipate that the HSFO will continue to experience volatile trading in the weeks ahead.
Meanwhile, VLSFO is expected to remain within a stable range, owing to a lack of significant new market drivers. The VLSFO cracks closed with premiums of approximately $11 per barrel, which reflects a weekly decline of about 5%.
In the spot market, VLSFO maintained stable premiums on Friday, while cash differentials for 380-cst HSFO saw a slight increase due to active trading. In inventory news, fuel oil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) region fell by 6.4% week-on-week, reaching 1.08 million tons, according to data from Dutch consultancy Insights Global.
Other significant developments include rising oil prices, which are on track for their first weekly gain in three weeks. This uptick follows the resumption of trade talks between U.S. President Donald Trump and Chinese leader Xi Jinping, causing optimism for economic growth.
Additionally, two of India’s major private-sector refiners have shifted focus from exports to local sales as they compete in the rapidly growing fuel retail market, currently valued at $150 billion. As for trading activity, there were no trades recorded for 180-cst HSFO, five trades for 380-cst HSFO, and one trade for 0.5% VLSFO.