Asia’s spot discount for very low sulphur fuel oil (VLSFO) deepened on Wednesday, weighed by prompt offers and a backdrop of high inventories.

Singapore’s VLSFO cash differential was pegged at a discount of $3.50 a metric ton, reflecting softer offers for November-loading parcels.

Prompt market structure for VLSFO and high sulphur fuel oil (HSFO) held in contango, with intermonth spreads sliding further from the previous session as incoming supply remained ample.

About 2 million tons of western arbitrage fuel oil are expected to reach Asia in October, stable from September, based on ship-tracking data. Meanwhile, more than 2.5 million tons of fuel oil are coming from the Middle East, higher month-on-month.

In recent tenders, Indonesia’s Pertamina offered a cargo of low-sulphur waxy residue for loading from Dumai in November, on top of another cargo that is expected to load from Balikpapan.

Cracks traded lower amid higher crude prices. November VLSFO crack (LFO05SGBRTCMc1) closed at a premium near $6 a barrel, while 380-cst HSFO crack (FO380BRTCKMc1) closed at a discount of about $4.10 a barrel, data compiled by LSEG showed.

INVENTORY DATA

– Fujairah heavy fuel inventories (FUJHD04) rose 38.9% to 8.52 million barrels (1.34 million tons) in the week to October 20, FOIZ data published by S&P Global Commodity Insights showed.

OTHER NEWS

– Oil prices pushed higher for a second day on Wednesday, rising by about 2%, buoyed by sanctions-related supply risks and hopes of a U.S.-China trade deal.

– Russian company Russneft has supplied a first oil cargo to the newly built Kulevi oil refinery in Georgia this month, according to LSEG ship-tracking data and industry sources.

– Nigeria’s Dangote oil refinery restarted production at its 204,000 barrel per day gasoline unit as planned on October 19 at a run rate of 60%, industry monitor IIR said in an emailed statement to Reuters.

– The U.S. Department of Energy said it is looking to buy 1 million barrels of crude oil for delivery to the Strategic Petroleum Reserve, as it seeks to take advantage of relatively low oil prices to help replenish the stockpile.

WINDOW TRADES

– 180-cst HSFO: No trade

– 380-cst HSFO: No trade

– 0.5% VLSFO: No trade
Source: Reuters