SINGAPORE: Refining cracks for fuel oil softened in Asia on Wednesday despite lower crude prices, with supplies continuing to flood East.
Singapore’s front-month crack for 0.5% very low sulphur fuel oil (VLSFO) dipped to a premium of $8.52 a barrel at the Asia close (0830 GMT) while the crack for 380-cst high sulphur fuel oil (HSFO) fell to a discount of $11.21 a barrel.
Fuel oil supplies to Asia hit three-month highs of 5.98 million tonnes in April, dominated by Russian flows that account for more than 85% of the total arrivals, based on Refinitiv Oil Research this week. However, out of this total volume, Middle Eastern exports dropped ahead of the region’s summer demand season.
Singapore’s cash premium for HSFO held steady at $7.25 a tonne on Wednesday, with high-sulphur supplies likely to tighten amid lower exports from the Middle East.
Meanwhile, VLSFO’s cash premium edged slightly higher at a premium of $3.73 a tonne, though steady offers of blendstocks are expected to cap the market’s recovery.
Poorer gasoil margins in recent weeks could prompt refiners in Asia to offer these components in the market instead of diverting them to middle distillate production, trade sources said.
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