SINGAPORE: Asia’s refining margins for high sulphur fuel oil (HSFO) exceeded one-year highs on Friday, with front-month cracks posting a weekly jump of more than 30%.
The 180-cst HSFO/Dubai crack spread climbed to a discount of $4.83 a barrel at the Asia close (0830 GMT), while the 380-cst HSFO/Dubai crack spread edged higher to a discount of $6.13 a barrel, Refinitiv data showed.
The cracks for 180-cst HSFO and 380-cst HSFO were last higher in early June 2022 and early May 2022 respectively, the data showed.
The strength was largely driven by firmer HSFO cracks in the West, industry sources said. In the US Gulf Coast, appetite for fuel oil as a refining feedstock has been robust and this buoyed HSFO cracks.
On supplies, high-sulphur fuel oil exports out of the Middle East are also expected to decline, as the region enters its peak summer in the third quarter. Meanwhile, cash premium for 0.5% very-low sulphur fuel oil eased to $17.03 a metric ton over cargo quotes, while the refining crack closed at a premium of $13.67 a barrel at the Asia close.
Fuel oil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub climbed 11% to 1.43 million metric tons in the week to June 22, approaching close to two-year highs, latest data from Dutch consultancy Insights Global showed.
Oil dropped for a second day on Friday and was heading for a weekly decline, as a UK interest rate hike added to concern over economic growth that outweighed lower US crude stocks and other signs of tighter supplies. Indian state-run refiner BPCL is in talks with Rosneft to buy about 6 million metric tons (43.8 million barrels) of discounted Russian crude at a price based on the Dubai benchmark, according to three sources with direct knowledge of the matter. Italy’s Eni and its Norwegian unit Vaar have agreed to buy private-equity backed Neptune Energy, in a deal valuing the assets of the gas and oil producer at $4.9 billion including debt, the two groups said on Friday.
Record heat across Asia is putting its surging renewable power fleet to the test, highlighting the need for backup supply, transmission system upgrades and tariff reforms to ensure reliability and stave off a slowdown in green energy adoption.