Spot premiums for fuel oil in Asia experienced a decline on Friday, primarily due to high inventory levels and modest demand, which constrained market recovery. According to Enterprise Singapore data, onshore inventories in Singapore have reached their highest levels in 18 weeks, fueled by strong imports from Iraq. The spot premium for 380-cst high sulphur fuel oil (HSFO) fell to approximately $2 per metric ton, while the premium for very low sulphur fuel oil (VLSFO) dropped below $6. Despite this premium reduction, margins remained relatively strong as crude prices weakened.
The 380-cst HSFO crack closed at over $1 per barrel, with VLSFO cracks also showing a healthy performance above $10 per barrel, according to LSEG data. Additionally, Kuwait Petroleum Corporation (KPC) recently sold a cargo of VLSFO for loading in mid-May. This cargo, expected to load between May 14 and 15, was sold to a Middle Eastern trading house at a discount in the low $10s per ton compared to Singapore’s VLSFO benchmark quotes, as noted by industry sources. In inventory news, ARA fuel oil stocks saw a 2.4% decline to 1.16 million tons during the week leading up to April 24, as reported by Dutch consultancy Insights Global.
On the broader oil market front, prices are positioned for a weekly loss as speculation regarding a potential OPEC+ output increase and a possible ceasefire in the Russia-Ukraine conflict could enhance supply. Additionally, mixed signals regarding U.S. tariffs create uncertainty in demand projections. Other developments included Valero Energy Corp’s reinstatement of its import license for fuel into Mexico after a temporary suspension, and Aster Chemicals and Energy’s plans to bid for Exxon Mobil’s petrol stations in Singapore. In the window trades, no transactions were recorded for 180-cst HSFO, while two trades were made for both 380-cst HSFO and 0.5% VLSFO.