Asia Fuel Oil: HSFO time spreads climb, Fujairah stocks fall to 6-month low

SINGAPORE: Asia’s front-month time spreads for both grades of high-sulphur fuel oil (HSFO) edged higher on Wednesday on signs of persistent feedstock demand from utilities as well as tightening supplies.

The front-month time spread for 180-cst HSFO and 380-cst HSFO each climbed 25 cents to $11.25 a tonne and $9.50 a tonne, respectively, Refinitiv data showed.

Fuel oil inventories in the Fujairah bunkering and storage hub dropped 14% to a near six-month low in the week ended Sept. 13, data released on Wednesday showed.

The lower inventories came amid higher fuel oil exports and modest bunkering demand at the Fujairah hub, industry sources said.

Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 1.25 million barrels, or about 197,000 tonnes, to 7.47 million barrels, or 1.18 million tonnes, data via S&P Global Platts showed. Fujairah’s fuel oil inventories were 40% lower than year-ago levels.

According to assessments by Refinitiv Oil Research, exports from the UAE rose to 433,000 tonnes in the week ended Sept. 12, up by 178,000 tonnes from the prior week.

“Both ATC (Aramco Trading) and Kuwait Petroleum Company (KPC) have imported cargoes from Southeast Asia through August, which supports the narrative of tight HSFO supplies within the Middle East and has amplified August inventory draws in Singapore, where prices appear overbought,” according to Refinitiv Oil Research.

“Availability of alternative supply contradicts the supposition that trade economics alone underpin these flows,” said Refinitiv Oil Research, while pointing to steady European fuel oil stocks and steady exports from Russia and Greece in August.

Gunvor bought a 20,000-tonne 0.5% very low-sulphur fuel oil (VLSFO) cargo from Trafigura in the Singapore window.

No high-sulphur fuel oil (HSFO) cargo trades were reported.

Bangladesh’s BPC is seeking two 20,000-tonne cargoes of 180-cst HSFO with a maximum 3.5% sulphur content for delivery into Chittagong over Oct. 12-15 and Oct. 23-25 in a tender closing on Sept. 15.

BPC is importing about 225,000 tonnes of HSFO per month on average, trade sources said, as soaring gas prices have prompted some utilities in the region to switch to relatively cheaper fuel oil feedstocks.

South Korea’s EWP is seeking 50,000 tonne of low-sulphur fuel oil with a maximum 0.3% sulphur content for delivery into Ulsan over Oct. 4-8 in a tender closing on Sept. 24 and valid to Sept. 30. EWP has issued six fuel oil import tenders so far this year.