SINGAPORE: Cash premiums for very low sulphur fuel oil (VLSFO) retained support on Monday, amid prospects of winter demand from North Asia, while the high sulphur fuel oil (HSFO) market remained steadily in discounts on expectations of steady supply inflows.
The 0.5% VLSFO cash differential edged $1.44 higher to a premium of $17.30 over Singapore quotes on Monday. The differential had averaged at a premium of about $6.50 per tonne over last month.
Despite a fifth batch of refined fuel export quotas from China last week, the fuel oil market was less impacted compared to the middle distillates market, which has seen cracks sliding after the release of the fresh quotas.
VLSFO cracks had retreated on Monday due to an uptick in crude oil prices, but remained largely range-bound from last week, Refinitiv data showed.
Meanwhile, the spot high sulphur fuel oil (HSFO) market looks set to remain in discounts for the first half of October, given the abundant supply. The 180-cst HSFO cash differential was at a discount of $1.22 per tonne to Singapore quotes on Monday, while the 380-cst HSFO cash differential was at a discount of 2.95 per tonne.
Oil prices jumped on Monday as OPEC+ considers cutting output by more than 1 million barrels a day.
Top oil exporter Saudi Arabia may raise prices for most crude grades it sells to Asia in November on expectations for demand recovery and Chinese refineries to increase output following the issuance of new product export quotas.
Shell PLC announced a second investment in Malaysia’s oil and gas sector in a month as the oil major and its partners, including Petronas, aim to revive output in an environment of tight global supply.
A heavy oil refinery turnaround season in Europe this autumn, plus French strike action, is set to push diesel prices higher and tighten supplies ahead of a European Union ban on Russian refined products, which is due to come into force early next year.
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