Asia fuel oil markets softened at the end of the trading week, as ample prompt supply continued to weigh on recovery.

Malaysia’s PRefChem continued to offer residual fuel. The refiner offered 540,000 tons of low-sulphur atmospheric residue for loading between October 12 and 13 in its latest tender, which will close next week, market sources said.

Benchmarks for the very low sulphur fuel oil (VLSFO) market were steady to slightly bearish on Friday. Meanwhile, spot offers for high sulphur fuel oil (HSFO) remained under pressure, weighing on cash differentials.

Selling interest for 180-cst HSFO has emerged this month, pulling the product’s cash differential into a steep discount. The 380-cst HSFO market also weakened day-on-day, with front-month backwardation narrowing.

Cracks traded lower on Friday. The VLSFO November crack closed at a premium near $7.70 a barrel, while 380-cst HSFO crack closed at a discount of around $4 a barrel, data compiled by LSEG showed.

INVENTORY DATA

– ARA fuel oil inventories fell 2.0% to 0.945 million tons in the week to October 2, based on data from Dutch consultancy Insights Global.

OTHER NEWS

– Oil prices rose 1% on Friday after four straight sessions of declines, as a fire broke out at one of the largest refineries on the U.S. West Coast, but were still on track for their steepest weekly fall since late June.

– Russia’s seaborne diesel and gasoil exports dropped 20% in September from August to about 2.4 million metric tons, as unplanned refinery outages triggered by Ukrainian drone strikes curbed production, data from market sources and LSEG showed.

– Crude oil flows from Iraq’s Kurdistan region to Turkey’s Ceyhan port are running at around 180,000 barrels per day, up from 150,000-160,000 bpd earlier in the week after they resumed on September 27 for the first time in 2-1/2 years, two shipping sources told Reuters.

– Occidental Petroleum will sell its chemicals arm OxyChem to Warren Buffett’s Berkshire Hathaway for $9.7 billion, the company said on Thursday, marking its biggest divestment yet to slash debt after years of costly acquisitions.

WINDOW TRADES

– 180-cst HSFO: No trade
– 380-cst HSFO: Two trades
– 0.5% VLSFO: No trade
Source: Reuters