HSFO slumps into discount in well-supplied market

Asia's spot differential for 380-cst high sulphur fuel oil (HSFO) flipped from a premium to discount on Wednesday as the market eyed ample prompt supplies.

The Singapore 380-cst HSFO cash differential was pegged at a discount wider than 50 cents a metric ton to cargo quotes, slumping into a discount for the first time since January 20. (FO380-SIN-DIF)

Expectations of recovering trade flows from the Middle East, along with higher regional Asia residual fuel exports in recent weeks, have weighed on fuel oil benchmarks.

The very low sulphur fuel oil (VLSFO) market has also shown signs of easing, with offers softening into late July as more western cargo arrivals loomed.

Indonesia's Pertamina offered three cargoes of low-sulphur waxy residue for loading in July via a tender that closes on Wednesday, according to market sources.

Cracks for both grades extended declines, with VLSFO (LFO05SGBRTCMc1) closing at a premium near $13 a barrel, while 380-cst HSFO crack (FO380BRTCKMc1) weakened to a discount near $7.80 a barrel, LSEG data showed.

INVENTORY DATA

- Fujairah heavy fuel inventories (FUJHD04) rose 31.6% to 5.30 million barrels (0.83 million metric tons) in the week to June 29, FOIZ data published by S&P Global Commodity Insights showed.

OTHER NEWS

- Oil prices ticked higher on Wednesday on concerns a breakdown in talks between Iran and the U.S. for a final agreement to end their war may extend supply disruptions in the key Middle East producing region.

- The Caspian Pipeline Consortium plans to export about 1.6 million barrels per day of CPC Blend crude in July, down from around 1.7 million bpd planned for June, after drone damage to a Russian gas facility meant output had to be reduced, two trading sources said.

- Swiss-based commodities trading house Mercuria and Italian oil and gas major Eni have agreed to set up a joint venture, the companies said on Wednesday, reflecting a trend for trading partnerships to capitalise on volatile markets.

- India has lowered windfall taxes on exports of diesel and aviation turbine fuel as global oil prices ease, while raising the duty on petrol exports, according to a government order.

- Nigeria's 650,000-barrel-per-day Dangote refinery has imported 2 million barrels of crude from ADNOC of the United Arab Emirates, traders told Reuters, marking its first such purchases of crude from the Middle Eastern producer.

WINDOW TRADES

- 180-cst HSFO: No trade.

- 380-cst HSFO: Two trades.

- 0.5% VLSFO: No trade.

ASSESSMENTS