SINGAPORE: The front-month crack for 180-cst high sulphur fuel oil (HSFO) slumped to a record low on Monday, as more high-sulphur barrels from Russia are expected to swarm towards Asia amid looming sanctions.
The European Union will ban Russian crude imports by Dec. 5 and Russian oil products by Feb 5, depriving Russia of oil revenues and forcing one of the world’s top oil producers and exporters to seek alternative markets. More barrels are expected to find homes in Asia after these bans kick in, with higher supply expectations capping recovery in Singapore HSFO markets into early next year.
The front-month 180-cst HSFO/Dubai crack fell 85 cents to a discount of $27.14 per barrel at the Asia close (0830 GMT) on Monday, Refinitiv data showed.
Cash differentials for 180-cst HSFO remained in discounts to Singapore quotes. The 380-cst HSFO market had flipped into a thin premium to Singapore quotes since last week, but was unlikely to rebound significantly.
Meanwhile, the cash differential for 0.5% very low sulphur fuel oil (VLSFO) dipped 19 cents to a premium of $21.09 per tonne to Singapore quotes on Monday.
Oil prices fell on Monday as investors took profits after a report on slowing economic activity in China re-ignited concerns about falling global fuel demand.
China has issued the first batch of crude oil import quotas for 2023, mainly to independent refiners, four sources familiar with the matter said. India’s monthly fuel demand in September was at the lowest since November 2021, government data released showed.
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