The fuel oil markets in Asia experienced stability on Monday amidst a backdrop of limited trading activity. Discussions regarding spot tenders have also slowed down, leading to a more subdued market climate. The intermonth spreads for high sulphur fuel oil (HSFO) have been trading at narrower backwardation levels for the upcoming months. Although the 380-cst cracks have eased slightly, they remain in premium territory.
A significant factor contributing to the stable market is the ample supply stemming from a heavy influx last month, which has hindered any notable recovery in benchmark prices. However, industry insiders express cautious optimism, anticipating some strength in the market due to seasonal summer demand. In contrast, the very low sulphur fuel oil (VLSFO) segment remained largely unchanged on the same day. The market outlook remains cautious as the new Mediterranean emission control area regulation is set to come into effect in May, which is expected to impact bunker trading dynamics significantly.
In refinery news, U.S. crude oil refiner Phillips 66 plans to maintain operations at around 90% of its combined capacity of 1.5 million barrels per day during the second quarter, indicating a stable refining environment. In other developments, oil prices stabilized on Monday as investors grappled with uncertainty related to U.S.-China trade talks. This uncertainty clouds the global growth outlook and consequently influences fuel demand and the potential for OPEC+ to increase supply. Additionally, Saudi Arabia, the world’s largest oil exporter, may raise crude prices for its Asian customers in June for the first time in three months due to recent benchmark gains, according to refiners.
South Korea’s S-Oil reported losses in the first quarter from its refining and petrochemical units and is watching market conditions closely as second-quarter margins could be affected by ongoing U.S. tariff negotiations and overall market volatility. In a separate update, Estonia released the oil tanker Kiwala, which had been detained for not displaying a valid country flag.