Asia’s market for 380-cst high sulphur fuel oil (HSFO) experienced sideways trading on Tuesday amid a burst of activity described as a frenzy of window deals. On that day, more than 20 spot trades for HSFO occurred, marking the highest daily traded volume for the year to date, according to market sources and compiled data. The cash differential for 380-cst HSFO in Singapore rose slightly compared to the previous day, maintaining a position within single-digit premiums.
However, the trading environment remained unstable, with margins continuing to decline. Front-month cracks have shifted back into discounts relative to crude quotes after maintaining premiums since mid-April. In addition to trading activity, Malaysia’s PRefchem offered 500,000 barrels of atmospheric residue for loading in June through a tender this week, further contributing to market dynamics.
Oil prices stabilized on Tuesday, buoyed by escalating geopolitical tensions. The ongoing conflict between Russia and Ukraine intensified, while Iran signaled plans to reject a U.S. nuclear deal proposal that could ease sanctions on its oil exports. Globally, refiners have unexpectedly profited from producing significant fuel quantities in recent weeks, providing a much-needed boost to a struggling sector ahead of a forecasted downturn later in the year.
This comes as plant closures have limited the fuel supply essential for meeting peak summer demand. Lastly, BP announced on Tuesday that the consortium managing the Shah Deniz gas field in the Azeri Caspian Sea has decided to invest $2.9 billion to expand output from the project. In contrast, Venezuela’s oil exports remained stable last month, benefiting from increased shipments to China despite a downturn in U.S.-authorized sales.